Did California sales tax apply to charges for applying a coating to store windows?

Plain-English summary

California treated applying the described coating to store windows as comparable to painting real property. Because painting real property was viewed as improving real property rather than selling tangible personal property, sales tax did not apply to the company's charge.

The company was correspondingly correct to purchase the coating's base ingredients tax paid.

Source and live-annotation limits

The letter answers a February 9 request but does not reproduce it. It does not identify the coating, ingredients, application method, windows, store, property interest, customer, contract, charge, invoice, tax-paid purchases, transaction, or later outcome. It says a copy of Ruling 21 was enclosed, but the PDF contains no enclosure.

The live annotation preserves only the analogy to painting real property and the exempt customer charge. It omits the personal-property-sale rationale, tax-paid ingredient conclusion, February 9 request, missing Ruling 21 enclosure, and absent transaction records.

What this means for you

Coating businesses and tax professionals

Document the coated property's real-property status, coating and ingredients, application work, contract, customer charge, and tax paid on materials. The letter's reasoning depends on treating the store windows as real property.

Common questions

Was the charge for coating the store windows taxable?

No, under the historical ruling applied in the letter.

Why?

Counsel treated the work like painting that improved real property rather than selling personal property.

How did the coater buy its base ingredients?

Tax paid.

Citations and references

• Former California Sales and Use Tax Ruling 21
• February 9, 1955 request, coating description and composition, customer job records, and enclosed Ruling 21 — referenced or described but not included

Verbatim support

From the official May 20, 1955 letter:

Painting real property is regarded as improving real property rather than selling personal property.

You are correct, therefore, in your understanding and you are likewise correct in purchasing your base ingredients tax paid.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/345-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/345-0040.pdf

Original ruling text

345.0040

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

May 20, 1955
Your letter of February 9
In reply refer to -- - XXXXX
S--- of A---, Inc.
XXX North --- Avenue
--- --- XX, California
Attention: Mr. H. G--Gentlemen:
You ask for confirmation of your understanding that sales tax does not apply to your charges in connection with a coating which you affix to store windows. This coating would be regarded as similar to painting and, therefore, governed by Sales and Use Tax Ruling 21, copy enclosed. As you will note in the last sentence of the ruling, tax does not apply to charges for painting real property. For a similar reason tax does not apply to your charges in connection with a coating which you affix to store windows. The basis for Ruling 21 is that sales tax applies to a sale of personal property. Painting real property is regarded as improving real property rather than selling personal property. You are correct, therefore, in your understanding and you are likewise correct in purchasing your base ingredients tax paid. Very truly yours,

Bill Holden (signed)
Associate Tax Counsel

BH:ph