Were charges taxable for refacing and refurbishing existing cabinets affixed to real property?

Plain-English summary

The June 22, 1993 letter answered a May 6 transmittal about refacing and refurbishing existing cabinets. Counsel assumed the cabinets were affixed to and part of real property. On that assumption, Regulation 1524(b)(3)'s rule for painting or finishing real property made the customer charges nontaxable.

The refinisher consumed paint, varnish, door knobs, and other materials and should not issue vendors resale certificates. If it had issued certificates, it had to file a return and pay use tax measured by the sales price—the amount paid to the vendor.

For material shipped from an out-of-state point to the business, the vendor collected use tax if it held a California seller's permit or was registered with the Board; otherwise the refinisher had to file and pay the tax directly. The source did not necessarily extend its result to cabinets the business manufactured and installed.

Source and live-annotation limits

The PDF does not reproduce the May 6 transmittal or identify completed jobs. It supplies no cabinet, fixture, building, title, attachment, contract, work, material, purchase, invoice, resale-certificate, vendor permit or registration, return, tax-payment, audit, assessment, refund, or later-outcome records. Those gaps leave the real-property premise and any actual material reporting unverified beyond the stated assumption and advice.

The live annotation preserves the assumed real-property classification, nontaxable customer charge, material-consumer result, examples, and purchase-price tax. It omits the May 6 transmittal, sales/use-tax background, resale-certificate instruction, return requirement, out-of-state-shipment definition, vendor permit/registration distinction, direct-remittance rule, manufactured-and-installed-cabinet limitation, and missing records.

What this means for you

Cabinet refinishers and tax professionals

Document that existing cabinets are affixed to and part of realty, distinguish refinishing from manufacturing and installation, and retain contracts, material invoices, resale certificates, vendor registration evidence, and use-tax returns.

Common questions

Were the cabinet-refinishing charges taxable?

No, if the existing cabinets were affixed to and part of real property.

Who consumed the paint, varnish, knobs, and other materials?

The refinisher.

Did the answer cover cabinets the business manufactured and installed?

Not necessarily. The letter expressly limited its advice.

Citations and references

• California Revenue and Taxation Code sections 6051 and 6201
• California Sales and Use Tax Regulation 1524(b)(3)
• May 6, 1993 transmittal, cabinet and real-property records, material purchases, resale certificates, vendor permits or registrations, returns, and tax records — described or referenced but not included

Verbatim support

From the official June 22, 1993 letter:

We assume that the cabinets you reface and refurbish are affixed to real property and are regarded as part of the real property.

This advice applies only to your refacing and refurbishing work and does not necessarily apply to your charges for cabinets which you manufacture and install.

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/345-0085.pdf

Original ruling text

345.0085

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District

450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-8208

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles

June 22, 1993

GRAY DAVIS
Controller, Sacramento

BURTON W. OLIVER
Executive Director

Mr. D--- P. L--F--- L--- W--XXXXX --- Way, #X
--- ---, CA XXXXX
Re:

SR -- XX-XXXXXX

Dear Mr. L---:
This is in response to you transmittal to the Board dated May 6, 1993 in which you inquire about the application of tax to refacing and refurbishing of existing cabinets. Revenue and Taxation Code section 6051 imposes a sales tax on all retailers measured by their gross receipts from retail sales of tangible personal property which occur in California. Revenue and Taxation Code section 6201 imposes an excise tax, commonly referred to as the use tax, on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer for storage, use, or other consumption in this state. The use tax complements the sales tax and is most frequently imposed upon in-state leases, out-of-state purchases of property for use in California, and use of property purchased with a resale certificate. We assume that the cabinets you reface and refurbish are affixed to real property and are regarded as part of the real property. Regulation 1524(b)(3) provides that tax does not apply to charges for painting or finishing real property. Thus, if our assumption is correct, your charges to your customer for refacing and refurbishing of the cabinets are not subject to tax. You are, however, the consumer of the materials which you use to reface and refurbish the cabinets. This means that when you purchase such materials (e.g., paint, varnish, door knobs etc.), you should not issue a resale certificate to your vendor. If you have issued resale certificates, you must file a return and pay use tax measured by the sales price of such items (i.e., the price you paid to your vendor).

Mr. D--- P. L---

-2-

June 22, 1993
345.0085

If such materials are purchased from out-of-state, 1/ use tax applies to your use of such materials. You must pay use tax to your vendor when purchasing the materials if the vendor has a California seller's permit or is registered with the Board. Otherwise, you must file a return and pay the use tax directly to the state. This advice applies only to your refacing and refurbishing work and does not necessarily apply to your charges for cabinets which you manufacture and install. It also only applies if the cabinets are affixed to and part of the realty. If you have further questions regarding Sales and Use Tax Law, please do not hesitate to write again. Sincerely,

Elizabeth Abreu
Tax Counsel

EA:cl

1/

Materials are purchased out-of-state if the vendor ships the materials from an out-of-state point to your business.