Were per-copy copier charges treated as paper sales when the machines required no specific paper?

Plain-English summary

An assistant counsel answered the redacted New York copier company's tax department manager about monthly-use and unit-copy charges on two unidentified office-copier models. The source calls this a recent question but includes neither that request nor the company's January 14, 1966 analysis.

An unspecified Board investigation indicated the copiers did not require specific paper. No investigation report, model specification, agreement, paper record or invoice appears. On that premise, the 3½-cent-per-copy charge did not represent gross receipts from transferring tangible personal property.

Assistant counsel agreed entirely with the absent January 14 analysis: both the monthly flat amount and per-copy amount were rental payments for tangible personal property. The letter cites no numbered statute, regulation, annotation or case and states no assessment, reported tax, refund or later outcome.

Live Annotation 330.3200 adds a broader branch not found in the letter. When a required per-copy charge is fairly attributable to lessor-supplied copy paper, the live entry treats it as receipts from transferring that paper and permits a resale certificate if the lessee regularly sells the copies. When the per-copy charge instead measures copier use and paper is charged separately, the live entry includes the per-copy amount in rent and says the lessor should not accept a resale certificate applying only to it.

Nothing in the supporting letter establishes that the lessor supplied paper, that any charge could be fairly allocated to paper, or that a lessee sold copies. This page therefore preserves the live alternatives without applying them to undocumented facts.

Common questions

Did labeling the amount “per copy” turn it into a paper sale?

No. For the reviewed models, the source found no paper transfer behind the charge and treated it as rent.

Did the lessor supply required paper on these facts?

The letter says the copiers did not require specific paper; it does not supply the contracts, specifications or investigation behind that finding.

How were both charges classified?

The flat monthly amount and the 3½-cent per-copy amount were both rent for tangible personal property.

When could a per-copy charge instead represent a paper sale?

The live annotation says that can happen when the required charge is fairly attributable to copy paper the lessor supplies.

Could the lessee give a resale certificate?

Under the live entry, yes for a paper-attributable charge if the lessee regularly sold its copies. Not for a per-copy charge measuring copier use when paper was charged separately.

Are those paper-allocation facts in the supporting letter?

No. The letter discusses only models requiring no specific paper and contains no supply, allocation or customer-resale evidence.

Citations and references

• No numbered statute, regulation, or case citation appears in the supporting opinion.
• Live Annotation 330.3200 — paper-allocation, copier-use and resale-certificate alternatives absent from the supporting letter
• Request, January 14 analysis, investigation and every agreement, specification, paper, sale, invoice, tax and outcome record — absent

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.3200
• Original supporting opinion: 330.3200 PDF

Original ruling text

330.3200

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

January 27, 1966

[X] Corporation
[X] Corp. – R--- S--- C--XXXX --- -----, NY XXXXX
Attention:

-- -- XX-XXXXXX

Mr. --- --Manager, Tax Department

Gentlemen:
This is in reply to your recent question on the taxability of the XXX and YYY Office Copiers’ monthly use charges and unit copy charges. Upon investigation it appears that [X] copiers do not require specific paper. Consequently, the 3 ½ cents per copy charge in no way represents gross receipts from the transfer of tangible personal property. Therefore, we entirely agree with the analysis expressed in your letter to us of January 14, 1966. Both the flat charge and the per copy charge are considered rental payments for the rental of tangible personal property. If you have any further questions on this or other applications of the Sales and Use Tax Law, please do not hesitate to write to us again. Very truly yours,

Philip R. Dougherty
Assistant Counsel
PRD:em
cc:

Out-of-State – District Administrator
New York