Did the historical ice exemption cover ice used on carrots before or during processing?

Plain-English summary

California denied the historical ice exemption for two uses involving carrots: topping trailers that stood for a day or two before processing, and placing ice in water used to keep products cool during processing. Both occurred before packing and were treated as processing uses.

The memorandum contrasted those facts with precooling performed after a railcar had been loaded and before forwarding. That later use was treated as part of packing or shipping.

The source gives no identified ice sale, shipment, tax amount, assessment or administrative outcome.

February inquiry, two carrot uses, and conclusion

The Headquarters memorandum answers a February 9 inquiry from the San Jose administrator. The subject is redacted, and the inquiry is not attached.

The first described use was ice placed on top of trailers of carrots that stood for one or two days before processing. The second was ice placed in water tanks, with that water then used to keep products cool during processing. The source identifies no seller, buyer, facility, carrot quantity, ice quantity, water quantity, processing step or actual transaction.

Sales Tax Counsel E. H. Stetson described former section 6359.5 as exempting ice used in packing and shipping or transporting food products in interstate commerce. He concluded that both described uses occurred in food processing before packing, so the ice sales were not exempt under that section.

The memorandum supplies no invoice, exemption certificate, shipment, interstate destination, tax period, measure, rate, return, audit, assessment, payment, claim or appeal.

Loaded-car distinction and missing reference

The inquiry referred to a note on page 137.3 of the California Tax Service concerning precooling ice. Counsel distinguished that example because its ice was used after the car carrying the goods had been loaded and before it was forwarded. He treated that post-loading use as packing or shipping.

The California Tax Service note is not reproduced or attached. The source does not identify the food, taxpayer, shipping car, origin, destination, route, carrier, ice quantity or tax treatment behind that separate example.

Live annotation and source limits

The live 400.0340 annotation accurately retains the pre-processing conclusion and March 2, 1956 date. It generalizes from the carrot facts to products and omits the trailer-topping and water-tank uses, one-to-two-day wait, February 9 inquiry, former section number, California Tax Service reference, loaded-car distinction, staff identities and absent transaction and tax-outcome record.

The official one-page PDF has a clean rendered text layer and no case citation or image. Both fresh downloads and extractions matched, and the original-text tail remains byte-identical after removal of only pdftotext's terminal newline and form feed.

What this means for you

Produce processors and ice sellers

Identify precisely when and why the ice is used. This historical memo separates pre-packing processing use from precooling after goods have already been loaded in their shipping car.

Accountants and tax professionals

Preserve product, process, packing, loading, ice-use, invoice, exemption and shipment records. Confirm current statutory language and do not import the missing California Tax Service example into a different transaction.

Common questions

Was ice used while carrots waited for processing exempt?

No.

Was ice in processing water exempt?

No.

What precooling example did the memorandum distinguish?

Ice used after the shipping car was loaded and before it was forwarded.

Why did timing matter?

The historical exemption covered packing and shipping or transporting, not cooling during earlier processing.

What two uses were denied?

Ice topped trailers of carrots waiting one or two days for processing, and ice cooled tank water used during processing.

What made the comparison example different?

Its precooling ice was used after the shipping car had been loaded and before forwarding, which counsel treated as packing or shipping.

Was an actual liability decided?

The source provides no sale, measure, rate, assessment, payment, claim, appeal or later action.

Citations and references

• Former California Revenue and Taxation Code section 6359.5 — historical interstate food-shipping ice exemption applied
• California Tax Service page 137.3 — separate precooling note referenced but not reproduced
• February 9 inquiry; redacted subject; ice seller and buyers; carrot owners; ice, water and carrot quantities; wait, processing, packing and loading records; shipments, destinations, routes and carriers; purchases and sales; prices and invoices; exemption certificate; tax period, measure and rate; return, audit, assessment, payment, claim, appeal and outcome — described or implicated but not included

Verbatim support

From the official March 2, 1956 memorandum:

We believe that the ice used as above described is used in the processing of the food prior to packing and that, accordingly, the sale of such ice is not exempted by Section 6359.5.

The ice in question was used in pre-cooling after the car had been loaded and before forwarding. In our opinion this ice was used in packing or shipping in that it was used after a car in which the goods were shipped was loaded.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 400.0340
• Original supporting memorandum: 400.0340 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

To:

San Jose – Administrator (SE)

From:

Headquarters – Sales Tax Counsel

Subject:

[X]

400.0340

Date:

March 2, 1956

This is in answer to your inquiry of February 9 concerning the application of the ice exemption to sales of ice which are, one, used in topping trailers of carrots which are allowed to stand for a day or two before processing and, two, placed into tanks of water as a cooling agent, which water is then used in keeping the products cool while processing. Section 6359.5 exempts sales of ice used or employed in “packing and shipping or transporting” food products in interstate commerce. We believe that the ice used as above described is used in the processing of the food prior to packing and that, accordingly, the sale of such ice is not exempted by Section 6359.5. You refer to a note on page 137.3 of the California Tax Service referring to ice used in pre-cooling. The ice in question was used in pre-cooling after the car had been loaded and before forwarding. In our opinion this ice was used in packing or shipping in that it was used after a car in which the goods were shipped was loaded.

E.H. Stetson
EHS:ds