How did California tax lettering new versus used luggage and related sign-painting work?

Plain-English summary

The December 4, 1950 letter answered an October 23 request about a general sign-painting business. Under former Ruling 21, lettering new luggage was taxable as finishing tangible personal property in producing a finished product for a consumer. Under former Ruling 30, lettering used luggage and repainting or refinishing a customer's used sign were nontaxable, and the painter consumed the materials used in that work.

Painting or lettering signs on building walls or windows, or signs attached to a building, was treated as work on real estate and was nontaxable. Lettering mailboxes in place was also nontaxable because the letter generally regarded them as attached to realty unless particular facts showed otherwise.

The same letter made lettering signs on new or used trucks and automobiles nontaxable and treated the painter as consumer of the paint. Material bought for resale and used in that work had to be reported at cost as self-consumed merchandise under former Ruling 68.

Source and live-annotation limits

CDTFA separately publishes this complete letter for Annotation 345.0060. Fresh text extraction confirms the two official PDFs are identical after substituting their printed annotation numbers. This page follows Annotation 345.0080's luggage focus; the companion entry focuses on vehicle lettering.

The letter supplies no customer, contract, luggage, sign, vehicle, building, mailbox, title, attachment, material, invoice, charge, purchase, tax-return, or completed-transaction records. It says copies of former Rulings 68, 30, 21, and 15 were enclosed, but the PDF contains none. It references Ruling 25 without reproducing it.

The live annotation preserves only the taxable charge for lettering new luggage and nontaxable charge for used luggage. It omits the used-sign, vehicle, building, attached-sign, and conditional mailbox branches; material consumption and self-reporting; October 23 request; five historical rulings; parallel source; missing enclosures; and absent transaction records.

What this means for you

Lettering businesses and tax professionals

Document whether personal property is new or used, whether other property is attached to realty, who owns the materials, whether paint came from resale inventory, and how charges and self-consumption are reported. The letter's rules are historical.

Common questions

Was lettering new luggage taxable?

Yes, under the historical letter.

Was lettering used luggage taxable?

No. The painter consumed the materials used in that work.

Did the same letter cover other property?

Yes. It also discussed used signs, vehicles, building signs, and in-place mailboxes.

Citations and references

• Former California Sales and Use Tax Rulings 15, 21, 25, 30, and 68
• October 23, 1950 request, sign-painting jobs, material purchases and withdrawals, tax return, and enclosed Rulings 15, 21, 30, and 68 — referenced or described but not included

Verbatim support

From the official December 4, 1950 letter:

Therefore, the tax does not apply where a customer’s sign is repainted, or used luggage is lettered.

Therefore, the tax applies to charges for lettering on new luggage.

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/345-0080.pdf

Original ruling text

345.0080

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

December 4, 1950
Dear Mr. L---:
This is in answer to your letter of October 23 with respect to the application of the State sales tax to your activities in the general sign-painting business. As you have indicated, we do not regard the tax as applicable to your charges for lettering signs on [new or used] trucks and automobiles. Accordingly, you are the consumer of paint so used. If the materials have been purchased by you for the purpose of resale, under Sales and Use Tax Ruling 68, copy enclosed, the cost price of such material should be reported on line 2 of your own sales and use tax return as self-consumed merchandise. Under Ruling 30, copy enclosed, the tax does not apply to charges for repainting or refinishing used articles. Therefore, the tax does not apply where a customer’s sign is repainted, or used luggage is lettered. Accordingly, you will also be regarded as the consumer of materials used in repainting or lettering in those instances. As indicated in Ruling 21, copy enclosed, the tax applies to charges for painting or otherwise finishing tangible personal property in connection with the production of a finished product for consumers, whether the article to be finished is supplied by the customer or by the finisher. Therefore, the tax applies to charges for lettering on new luggage. In general, the tax appears to apply only where the personal property painted or lettered is new, in conformity with Rulings 21 and 30. Rulings 21, 25, 30 are specific applications of the general rule stated in Ruling 15, copy enclosed. As stated in Ruling 25, the tax does not apply to your charges for painting or lettering on real estate. Accordingly, you will also be regarded as the consumer of materials used to paint signs on walls or windows of a building, or to paint signs attached thereto. In general, we regard mailboxes as attached to realty, unless the facts of the particular case warrant a contrary conclusion. As fixtures and attached property are treated as realty in the law, it is our opinion that the tax would not apply to charges for lettering mailboxes in place, whether the latter are new or used. Very truly yours,

R. G. Hamlin
Associate Tax Counsel
RGH:HB
Cc:

W. R. Thomson