Did assembling purchased scaffolding components in different configurations mean the equipment was no longer leased in the same form as acquired?

Plain-English summary

A June 11, 1990 memorandum from a Principal Tax Auditor gave District Principal Auditors statewide guidance, not a taxpayer-specific Legal Division opinion. It distinguished manufacturers or lessors altering/fabricating scaffolding from lessors buying components and erecting them without physical change.

Rental receipts from a manufacturer or fabricator were generally taxable because the completed scaffolding was not leased in substantially the same form as the property acquired.

A lessor that merely assembled purchased components in different customer configurations did not change their form. Without welding, cutting or similar work, the components remained leased in the same form as acquired.

The auditor said a Tax Information Bulletin article was being prepared, but the source contains no article, title, issue or proof of publication.

On July 10, 1996, a Legal Division memorandum titled “Non-Attorney Opinions” reviewed and agreed with the 1990 memo. Its quoted conclusion appears under “Regulation 1660” and reproduces the rule, but prints “lease din” for “leased in” and dates the first guidance June 11, 1991. Page 1 and live Annotation 330.4110 instead say June 11, 1990; the original text remains unaltered.

That classification allowed Regulation 1660's acquisition-tax treatment to matter. Neither memo states that every unaltered-component rental is automatically nontaxable or supplies acquisition-tax/election facts. No taxpayer, scaffolding, purchase, fabrication/assembly record, lease, rent, return, audit or later outcome appears.

Common questions

Did changing the configuration count as fabrication?

No, not by itself.

Was the first memorandum a lawyer's opinion?

No. It was Principal Tax Auditor guidance; the Legal Division separately confirmed it in 1996.

What physical work could change the result?

The source gives welding and cutting as examples.

Were manufacturer rentals generally taxable?

Yes, because the manufactured or fabricated scaffolding was not in the same form as acquired.

Did same-form status alone make other rentals tax-free?

No. The source does not establish acquisition-tax payment or a timely election.

Why do the source dates conflict?

The first memo is dated June 11, 1990. The 1996 confirmation's quoted digest says June 11, 1991; live 330.4110 uses 1990.

Was the promised bulletin article available?

No. The memo says it was being prepared but identifies no published article.

Citations and references

• Regulation 1660 — property-leased-in-form-acquired and rental-measure rules
• June 11, 1990 Principal Tax Auditor memorandum — statewide non-attorney classification guidance
• Future Tax Information Bulletin article — promised but absent
• July 10, 1996 Legal Division memorandum — confirmation that source-prints the first date as June 11, 1991
• Live Annotation 330.4110 — uses June 11, 1990 and July 10, 1996
• Taxpayer, property/work/tax, leases/election/returns, audit and outcome — absent

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.4110
• Original supporting opinion: 330.4110 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

To:

District Principal Auditors

From:

Glenn A. Bystrom
Principal Tax Auditor

Subject:

Leases of Scaffolding

330.4110

Date:

June 11, 1990

To ensure statewide consistency, I would like to reaffirm how tax applies to leases of scaffolding. It is important to first recognize the distinction between: (1) leases by manufacturers or those who alter or fabricate scaffolding parts; and, (2) leases by those who purchase the component parts and lease and erect them without physically altering the individual parts. Rental receipts from leases by manufacturers or fabricators are generally taxable since the scaffolding is not leased in substantially the same form as acquired. However, where the lessor makes no changes to the component parts (e.g. welding, cutting, etc.), the components will be considered leased in the same form as acquired, even though the components may be assembled in different configurations for different customers. A tax information article on this subject is being prepared for inclusion in a future issue of the Tax Information Bulletin. Should you have any questions regarding this matter, please let me know.

GAB:gjm
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cc:

Ms. Judy Agan
Mr. Robert Nunes
Mr. Donald Hennessy
Headquarters Audit Supervisors

State of California

Board of Equalization
Legal Division (MIC:82)

Memorandum
330.4110
To:

Mr. Glenn Bystrom

From:

Gary Jugum

Subject:

Non-Attorney Opinions

Date:

July 10, 1996

I have reviewed your memorandum of June 11, 1990 to District Principal Auditors. We are in agreement with his conclusion, as follows:

Regulation 1660
Scaffolding. Rental receipts from leases of scaffolding by manufacturers or fabricators are generally taxable since the scaffolding is not lease din substantially the same form as acquired. On the other hand, where the lessor makes no changes to the component parts (e.g. welding, cutting, etc.), the components will be considered leased in the same form as acquired, even though the components may be assembled in different configurations for different customers. 6/11/91, 7/10/96.

Gary Jugum
By MB