Were replacement parts exempt when installed in repaired cameras before contract-required delivery to customers outside California?

Plain-English summary

Board Review staff identified as PER sent a memorandum on July 3, 1957 about an unidentified camera manufacturer. Headquarters Sales Tax Counsel answered on July 16. The request, manufacturer and supporting records are not published.

According to counsel's understanding, the business manufactured and sold cameras that customers sometimes returned for repair. It applied sales tax to parts charges for California customers. When a customer was out of state, a camera was shipped by common carrier and the parts sale was treated as exempt within interstate commerce.

Counsel agreed that replacement parts attached to repaired cameras for out-of-state customers were exempt from sales tax. Even if title to the parts passed when they were installed under the theory of accession, the transaction appeared to fit historical Ruling 55 A1(c)(2).

The decisive stated condition was the repair contract: it required delivery to the customer outside California. The source therefore does not establish that California installation alone produced an exemption.

The memorandum provides no actual customer, camera, replacement part, repair contract, carrier record, invoice, tax amount or proceeding. The live annotation preserves the exemption, accession possibility and contract condition but calls the authority "the regulation" instead of identifying the PDF's historical ruling.

Common questions

Did installing the replacement parts in California destroy the exemption?

No, under this memorandum. Counsel said the transaction appeared to fit the cited historical rule even if accession passed title when the parts were installed.

What fact did the exemption depend on?

The repair contract had to require delivery of the repaired camera to the customer outside California.

Was common-carrier delivery mentioned?

Yes. The factual description says the camera was shipped by common carrier when the customer was out of state, although no carrier or shipment record is supplied.

Were parts for California customers treated the same way?

No. The memorandum says sales tax was applied to the parts charge for California customers.

Did counsel decide how repair labor was taxed?

No. The conclusion addresses sales of replacement parts, not a separately stated labor charge.

Does the source document an actual exempt sale or assessment?

No. It provides no customer, contract, shipment, invoice, tax amount, filing, audit, assessment, claim, appeal or later outcome.

Citations and references

• Sales and Use Tax Ruling 55 A1(c)(2) — historical outside-delivery authority cited but not reproduced
• Interstate commerce — invoked without a numbered constitutional or statutory provision
• July 3, 1957 Review memorandum — identified in the response but absent
• July 16, 1957 Headquarters Sales Tax Counsel memorandum — conditional exemption for replacement parts
• Official Annotation 325.0760 — preserves the holding and contract condition while describing the authority generically

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.0760
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0760.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

325.0760

To:

Review (PER)

From:

Headquarters – Sales Tax Counsel (EHS/GAT)

Date:

July 16, 1957

Subject:

This is in reply to your memorandum of July 3, 1957, regarding ---. Our understanding of the facts is as follows:
--- manufactures and sells cameras. From time to time such cameras are returned by customers for repairs. Sales tax is applied to the charge for parts to California customers. But, where the customers is out-of-state, the camera is shipped by common carrier and the sale of parts is considered exempt as within interstate commerce. It is our opinion that the sale of replacement parts which are attached to the repaired cameras to out-of-state customers is exempt from sales tax. Although title to the replacement parts may pass when installed in the camera, under the theory of accession, the transaction appears to come within the terms of Ruling 55 A1 (c) (2). The exempt status of the replacement parts depends on the fact that delivery to the customer is made out-of-state, pursuant to the terms of the repair contract.

E. H. Stetson

GAT:cl