When were rug-cleaning and sizing charges services, and when did work on a new rug become taxable?

Plain-English summary

Charges for cleaning customer-owned rugs and carpets were service charges and were not subject to sales tax. The cleaner consumed the cleaning materials, so tax applied when those materials were sold to the cleaner.

The letter assumed “sizing” meant applying starch or a glutinous material without cutting or altering the rug's dimensions. On an already used rug or carpet, sizing received the same service treatment as cleaning.

When sizing was performed on a new rug or carpet, the entire customer charge was taxable and the cleaner was treated as reselling rather than consuming the applied materials. If those materials had already been bought tax-paid, the cleaner could take the return deduction described in Ruling 71.

Source and live-annotation limits

The letter does not reproduce either inquiry, identify the cleaner or customers, or supply rugs, carpets, their new-or-used condition, sizing methods, starch or other materials, dimension records, charges, invoices, purchases, tax-paid evidence, return Line 11 entries, audit, assessment, completed transactions, or later outcome. Former Ruling 71 was described as enclosed but is absent. The source prints “chargon” and “sale of sale”; those defects are preserved in the original text and not treated as additional facts.

The live annotation preserves the cleaning-service rule, material-consumer result, sizing assumption, new-property exception, resale treatment, and tax-paid deduction. It omits the unidentified inquiry posture, incomplete familiarity with trade terminology, specific return line, Ruling 71 and missing enclosure, source defects, missing records, copied auditing office, and later-outcome gap.

What this means for you

Rug and carpet cleaners and tax professionals

Document whether property is new or previously used, precisely what sizing does, any cutting or dimension change, every material and purchase-tax treatment, customer charges, and return deductions. The opinion's sizing result rests on its stated no-cutting assumption.

Common questions

Did the opinion cover cutting a rug to a new size?

No. Its assumption expressly excluded cutting or otherwise altering the rug's dimensions.

Why did a new rug change the result?

The letter classified the full charge as taxable and the applied materials as resold when the work was performed on new property.

Citations and references

• Former California Sales Tax Ruling 71 — cited for a tax-paid materials deduction on return Line 11; copy described as enclosed but not reproduced
• Unidentified inquiries, rugs and carpets, sizing process, customer charges, material purchases, and return records — described or referenced but not included

Verbatim support

From the official May 24, 1954 letter:

On our assumption of the facts, the tax applies in the same manner as to your charges for cleaning except where the work is performed on a new rug or carpet.

In this case, your entire charge is taxable and you are regarded as reselling rather than consuming the materials used.

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/360-0180.pdf

Original ruling text

360.0180

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

May 24, 1954

Gentlemen:
You inquire concerning the application of sales tax to your chargon for cleaning of rugs and carpets. This is a service and your charges are not subject to sales tax. You are the consumer of materials used and the sale of sale of such materials to you is at retail and taxable. You also inquire concerning the application of tax to your charges for sizing of rugs and carpets. We are not completely familiar with the terminology of your trade, but assume that sizing rugs refers to the application of a starch or glutinous material and does not mean the cutting of a rug or carpet to alter its dimensions. On our assumption of the facts, the tax applies in the same manner as to your charges for cleaning except where the work is performed on a new rug or carpet. In this case, your entire charge is taxable and you are regarded as reselling rather than consuming the materials used. If such materials have been purchased tax paid, you may take a deduction on line 11 of your return in accordance with ruling 71 (copy enclosed).

Very truly yours,

Bill Holden
Assistant Counsel

CC: San Francisco - Auditing