Could a shipper treat packing-list envelopes enclosed with merchandise as exempt containers?

Plain-English summary

California treated a shipper as consumer of the packing list enclosed with merchandise and the envelope holding that list. The envelope was not an exempt container under former Ruling 49, so Associate Tax Counsel R. G. Hamlin said the printer correctly taxed its envelope sale.

The source separately said printed handbills and prize-drawing tickets were taxable at retail but treated another buyer's purchase as resale based on its certificate and memorandum. That distinct issue is not the subject of Annotation 400.0160 but remains part of the same official letter.

Two customers, resale evidence, Ruling 49, and missing transactions

The February 1 response answers a December 6 request but gives no request year. It concerns a redacted seller's printed handbills and prize-drawing tickets sold to X Company and packing-list envelopes sold to Y Company. The request, parties, printed items, envelopes, merchandise and sales documents are absent.

Handbills and prize-drawing tickets were taxable when sold at retail. But a resale certificate stamped on X Company's seller's permit and a November 20, 1950 memorandum from X reportedly showed that it bought the items for resale. Hamlin therefore said the seller's sale to X was not taxed. Neither the permit, certificate, memorandum, resale transaction nor later customer sale is included.

Y Company claimed its packing-list envelopes were nontaxable shipping supplies because they were containers within former Ruling 49. The source says a copy of that ruling was enclosed, but the official PDF includes none and gives no ruling date, full rule or separate URL.

Hamlin treated the shipper as consumer both of the packing list enclosed with merchandise and of its envelope. That made the printer's sale taxable rather than exempt under Ruling 49. The source does not describe the merchandise, list content, envelope, charge, title, possession, delivery, customer use or disposal.

The live 400.0160 annotation publishes only the packing-list and envelope consumer conclusion. It omits Ruling 49, the separate handbill and prize-ticket question, retail-tax baseline, resale certificate, seller's permit, November 20 memorandum, two-customer structure, missing records and absent outcome.

The official one-page PDF has a clean rendered text layer and only a small seal image. Two fresh downloads and extractions matched exactly, and the preserved source tail remains byte-identical after removal of only pdftotext's terminal newline and form feed. No case citation appears.

What this means for you

Printers and shippers

An envelope holding a packing list was consumed by the shipper under this historical view, not resold as a container. Document what printed material and envelope do, who receives them and the exact authority for any exemption.

Accountants and tax professionals

Separate retail taxability from a specific buyer's resale evidence. Preserve permits, resale certificates, customer memoranda, invoices and delivery records; this source includes none of them and incorporates an absent Ruling 49.

Common questions

Was the packing-list envelope treated as a shipping container?

No. Hamlin rejected Y Company's container claim under Ruling 49.

Who consumed the packing list and envelope?

The shipper enclosing both with the merchandise.

Was the printer's envelope sale taxable?

Yes. Hamlin said the printer had correctly treated the envelope sale as taxable.

Did the letter decide the handbill and prize-ticket issue?

Yes. Retail sales were taxable, but X Company's purchase was treated as resale based on the certificate and memorandum described.

Are the certificate and memorandum included?

No. Neither is reproduced in the official source.

Is Ruling 49 included?

No. The letter calls it enclosed, but the PDF contains only this response.

What tax amount or outcome followed?

The source gives no price, measure, rate, return, audit, assessment, payment or later outcome.

Citations and references

• Former California Sales and Use Tax Ruling 49 — historical container treatment claimed and rejected for packing-list envelopes
• November 20, 1950 X Company memorandum — referenced but not included
• Resale certificate stamped on X Company's seller's permit — described but not included
• December 6 request; seller, customers and merchandise; handbills and prize tickets; packing lists and envelopes; invoices, charges, contracts and deliveries; resale and customer-sale records; tax measure and rate; return; audit; assessment; payment; claim; appeal; and outcome — described or implicated but not included

Verbatim support

From the official February 1, 1951 letter:

You are advised that the tax does apply to the retail sale of printed hand bills and prize drawing tickets.

Therefore, the tax will not apply to your sale of the merchandise to this purchaser.

However, we regard the shipper of tangible personal property as the consumer of the packing list which is enclosed with the merchandise and of the envelope in which the packing list is enclosed.

Accordingly, the sale of packing list envelopes is not exempt under Ruling 49, and it is our opinion that you correctly regarded your sale as subject to the tax.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 400.0160
• Original supporting opinion: 400.0160 PDF

Original ruling text

400.0160

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

February 1, 1951

Attention:

Mr. [X]

Gentlemen:
This is in answer to your letter of December 6 with respect to the application of the state sales tax to your sale of printed hand bills and prize drawing tickets to the [X] Company and to your sale of packing list envelopes to the [Y] Company. You are advised that the tax does apply to the retail sale of printed hand bills and prize drawing tickets. It appears, however, from the resale certificate stamped on the seller’s permit and the memo dated November 20, 1950, issued to you by the [X] Co., that it purchased this merchandise for the purpose of resale. Therefore, the tax will not apply to your sale of the merchandise to this purchaser. The claim of exemption by the [Y] Co., is based on its statement that the packing list envelopes constitute shipping supplies which are not taxable, apparently on the basis that the envelopes are containers, within the meaning of Ruling 49, copy enclosed. However, we regard the shipper of tangible personal property as the consumer of the packing list which is enclosed with the merchandise and of the envelope in which the packing list is enclosed. Accordingly, the sale of packing list envelopes is not exempt under Ruling 49, and it is our opinion that you correctly regarded your sale as subject to the tax. Very truly yours,

R.G. Hamlin
Associate Tax counsel
RGH:HB