Were trailer-mounted water-purification and water-chilling units mobile transportation equipment?

Plain-English summary

Audit staff asked whether trailer-mounted water-purification units were mobile transportation equipment. The units were mounted on trailers solely so they could be moved to the place where water purification was needed, and the trailer represented less than 18 percent of the completed unit's cost.

California classified them as MTE. The trailers were licensed with the Department of Motor Vehicles and, as the source puts it, “apparently” could be moved at highway speeds for long distances. The source treated that transport capability as controlling even though the equipment's main work occurred after arrival at a site.

The final February 1978 memorandum reached that result for consistency with prior classifications of cement mixers, air compressors, vehicle-engine hoists, and mobile water-chilling units. The attached June 1977 memorandum likewise classified a water-chilling unit as MTE because it required no special plates and was designed for interstate travel at the maximum highway speed allowed by law.

The April 5, 1977 memorandum was provisional and suggested waiting for a related Board matter if the audit timetable allowed. The June 17, 1977 and February 28, 1978 memoranda supplied affirmative staff classifications, but neither reports the Board's decision in that related case.

Which document decided what

Glenn L. Rigby's April 5, 1977 memorandum to the Downey principal auditor followed a meeting about mobile truck cranes. One crane met the proposed substantial-distance/highway-speed standard and was being taken to the Board. Because Rigby was uncertain how the Board would decide, he recommended deferring the water-chilling determination for the anticipated hearing in the next month or month and a half. If the audit had to close first, staff should classify the chilling units as MTE. The petition, hearing and later Board outcome are not supplied.

The June 17 follow-up gave the water-chilling unit an affirmative MTE classification: it did not require special vehicle plates, was designed for substantial distances including interstate travel, and could travel at the maximum speed allowed by state law. It did not state that the expected crane decision had occurred or caused that result.

The February 28, 1978 memorandum to San Jose auditing concerned redacted A--- M--- and a January 23 request whose full text and year are not given. The author, identified as Tax Counsel “JHM,” initially doubted that trailer-mounted purification units qualified. The trailers existed solely to move the units where needed and cost less than 18% of the completed units. DMV trailer licensing and apparent highway capability, together with comparable classifications, led counsel to choose consistent MTE treatment. The two Rigby memoranda are attached; separate decisions about cement mixers, air compressors and engine hoists are not.

The live annotation groups the equipment as DMV-licensed and highway-capable and says mobile water-chilling units “involve leases of mobile truck cranes.” The PDF discusses the crane petition and chilling-unit determination as related but separate matters; it does not establish that a water chiller is itself a crane. No models, engineering tests, registration copies, actual routes or tax computations are provided.

Common questions

Did the unit's onsite water-treatment purpose prevent MTE status?

No. The source relied on the trailer's licensing and substantial-distance highway capability.

Did it matter that the trailer was less than 18 percent of total unit cost?

The memorandum recorded that fact but still classified the completed unit as MTE.

What other equipment did California treat as comparable?

The source named cement mixers, air compressors, vehicle-engine hoists, and mobile water-chilling units.

Did the published source contain the Board's crane decision?

No. It contains the preliminary staff discussion and later equipment memoranda, without the Board's ruling or an identified petition number.

Citations and references

• The source did not cite a statute or regulation by number in its final classification memorandum.

Verbatim support

From the three published memoranda:

I would suggest that we hold-off making a final determination on the mobile water-chilling unit until after the Board hearing.

However, if it is necessary to complete your present audit prior to this date, we should conclude such units are mobile transportation equipment.

To be consistent, I think the units described in your memorandum of January 23 should be classified as mobile transporation equipment.

The last quotation preserves the source's spelling.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/335-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/335-0009.pdf

Original ruling text

State of California

Memorandum

To:

Downey – Principal Auditor (GS)

From:

Headquarters – Legal
Glenn L. Rigby

Subject:

Mobile Water-Chilling Units

Board of Equalization

335.0009

April 5, 1977

After our meeting with the parties involving leases of mobile truck cranes, it was decided only those cranes which were capable of moving substantial distances at highway speeds would be regarded as mobile transportation equipment. One particular crane in question met these criteria. Accordingly we are proceeding to take that case to the Board. In view of the uncertainty as to how the Board may feel on this matter, it is advisable to wait until the Board hears and decides this particular petition case. This should occur within the next month or month-and-a-half. Accordingly, I would suggest that we hold-off making a final determination on the mobile water-chilling unit until after the Board hearing. However, if it is necessary to complete your present audit prior to this date, we should conclude such units are mobile transportation equipment.

GLR:po

cc:

Donald Brady

State of California

Board of Equalization

Memorandum

To:

Downey – Principal Auditor (GS)

From:

Headquarters – Legal (GLR)

Subject:

Mobile Water-Chilling Units

335.0009

June 17, 1977

This is in furtherance to my memo of April 5, concerning the above subject. In view of the fact that the unit does not require special vehicle plates, is designed to move substantial distances, including interstate travel, and the highway speeds of the unit is the maximum allowed by state law, it is our opinion the unit is properly classified as mobile transportation equipment.

GLR:po
Cc:

Robert Nunes
Donald Brady
T. P. Putnam
W. E. Burkett

State of California

Memorandum

To:

San Jose – Auditing (PAN)

From:

Tax Counsel (JHM) - Headquarters

Subject:

A--- M---

Board of Equalization

335.0009

February 28, 1978

SR – XX XXXXXX

You ask whether certain trailer mounted water purification units are to be considered to be mobile transportation equipment. These units are mounted on trailers solely so that they can be transported readily to the place where the water purification units are needed. The cost of the trailers is less than 18 percent of the cost of the completed units. However, the trailer units are licensed with DMV as trailers and apparently are capable of being moved at highway speeds for long distances. My initial reaction was that these items might not be mobile transportation equipment. However, I now find that certain comparable items -- cement mixers, air compressors, vehicle engine hoists, and mobile water chilling units -- have been ruled to be mobile transporation equipment. See attached letters dated June 17, 1977 and April 5, 1977 by Glenn L. Rigby. To be consistent, I think the units described in your memorandum of January 23 should be classified as mobile transporation equipment.

JHM/at
attachments
cc:

Mr. Donald F. Brady
Mr. T. P. Putnam
Mr. W. E. Burkett
Mr. Philip R. Dougherty
all w/attachments