Was an orthodontic laboratory fabricating taxable plaster models when it restored them after the orthodontists had used them?

Plain-English summary

Orthodontists owned and had already used the plaster models. The laboratory worked on them after that use and before the orthodontists placed them in storage.

Counsel classified that work as restoration of used property rather than manufacturing or partial fabrication. It distinguished work performed before the orthodontist first used a model, which would be part of taxable fabrication.

Making a new diagnostic plaster model for a dentist would also be taxable. The letter explained that the special statutory treatment for producers of diagnostic x-ray films did not have a comparable provision for producers of diagnostic plaster models.

Counsel recommended granting the laboratory's petition. The source's final sentence about the measure adjustment is incomplete, so the exact wording and amount of that recommended adjustment are not recoverable from this PDF.

Common questions

Did the timing of the laboratory work matter?

Yes. Post-use work before storage was restoration; the same work before first use would be fabrication.

Were diagnostic plaster models treated like diagnostic x-rays?

No. The letter said section 6020 specifically covered x-ray producers and had no counterpart for plaster-model producers.

Citations and references

• California Revenue and Taxation Code section 6020 (producers of diagnostic x-ray films, as cited)
• March 14, 1969 hearing report (approved and identified as attached, but not reproduced in the PDF text)
• Work papers for October 1, 1965 through September 30, 1968 (identified as attached, but not reproduced)

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/360-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/360-0080.pdf

Original ruling text

360.0080

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 17, 1969

Dear Mr. ---:
This is with reference to the petition for redetermination which you filed in the matter of a tax determination against your business, known as --- --- Orthodontic Laboratory. On review of the facts we find that the work performed by you on the plaster models belonging to various orthodontists is done after they have used the models and before they are to be stored. Under these circumstances, the work done by you is not fabrication of the model or partial fabrication of it. Rather it is our opinion, the work is restoration of used property. If you were to perform the work on the model before the orthodontist used it, we would be compelled to conclude that the work was part of the manufacturing (fabricating) process and it would be taxable. Charges for making a model for a dentist would be taxable, notwithstanding that the model is more or less a parallel to an x-ray as a diagnostic tool. X-rays are treated as they are, for tax purposes, because under section 6020 of the Sales and Use Tax Law, the producers of x-ray films for the purpose of diagnosis are the consumers of the materials and supplies used in the production thereof. There is no comparable provision in the law for the producers of plaster models used for diagnosis purposes by orthodontists. We are recommending that your petition for redetermination be granted and that the measure sums representing charges for restoration of the plaster models.

Very truly yours,
Robert H. Anderson
Tax Counsel
RHA/vs [ lb ]
Bc: Oakland – District Administrator
Attached are two copies of hearing report which has been approved. This hearing was held in Oakland on 3/14/69. Also attached are the work papers for the period 10/1/65 – 9/30/68.