Could a microfilmer buy unexposed film for resale when the finished microfilm itself became the customer's property?

Plain-English summary

A representative asked about a client's purchase of unexposed microfilm. Unlike the normal photographer or photostat producer described in the letter, who retained a negative and sold a print, this microfilmer represented that the film itself became the customer's property when processing finished.

Under that arrangement, the letter allowed the microfilmer to buy unexposed film ex tax with a resale certificate because that same film was processed and sold to the customer. The permission was expressly limited to film actually resold onward.

The result changed when the microfilmer retained the film and sold only copies or prints produced from it. In that situation, the microfilmer consumed the retained film and tax applied to its purchase.

The letter separately said an earlier December 28 response applied historical Ruling 23 to microfilming, requiring a seller's permit and tax reporting on microfilming charges. It quoted Ruling 23A for tax on materials used to make photographs or photostat copies but not becoming their ingredients or components, including film. It also referred to a September 25 letter for tax on the completed film sale to the customer. Thus the resale-certificate answer concerned the microfilmer's input purchase, not an exemption for the processing charge or customer sale.

Source posture and live annotation

The official source answers a December 30, 1960 request, but supplies none of that request, the December 28 or September 25 Board letters, or the full text of Rulings 23 and 23A. It identifies no representative, microfilmer or customer; contract; title or delivery term; film; certificate; invoice; copy or print order; permit; return; tax computation; audit or later outcome. The conclusion rests on the stated fact that the film became the customer's property at completion and gives no evidence of an actual transfer.

The live 420.0140 annotation, in the 2026 revision of the Business Taxes Law Guide, retains film sold to customers, no use to produce prints, resale-certificate treatment and January 5, 1961 date. The source's retained-film branch covers copies or prints, while the live page mentions only prints. It omits the representative and client, December correspondence, seller's permit, taxable microfilming charges, Rulings 23 and 23A, ordinary retained-negative comparison, completed-customer-sale tax, missing records and absence of an applied outcome.

CDTFA's Annotated Legal Opinions collection says the letters are summarized as annotations and that statutory law controls whenever a statute and annotation conflict. The official one-page PDF has a clean native text layer and one small page-1 letterhead stencil rather than scanned text, so no OCR was required. Both fresh direct PDF downloads and both live-page downloads were byte-identical, duplicate default PDF text extractions matched, and the original-text section remains byte-identical to its committed version and fresh extraction after removal of only the extractor's terminal newline and form feed.

What this means for you

Microfilm and document-imaging businesses

Document what physical property the customer actually receives and when title passes. A resale certificate for film depends on selling that film onward, not merely using it as a retained master to create copies. Separately analyze the processing charge and finished-film sale; this historical letter treated both as taxable under its cited rules.

Common questions

Q: Could every microfilmer buy film for resale?

A: No. The answer applied only where the film purchased was itself processed and sold to the customer.

Q: What if the microfilmer kept the film?

A: Tax applied to the film purchase when the microfilmer retained it and sold only copies or prints.

Q: Did ex-tax acquisition make the customer sale exempt?

A: No. The letter separately stated that tax applied to the sale of the completed film to the customer.

Q: Were the processing charges taxable?

A: Yes under the historical Ruling 23 treatment described in the missing December 28 letter.

Q: Did the source prove an actual film transfer or tax result?

A: No. It gives no contract, delivery record, invoice, certificate, return, audit or outcome.

Citations and references

• Historical California Sales and Use Tax Ruling 23 — described as applying to microfilming, permit and charge reporting, but not reproduced
• Historical California Sales and Use Tax Ruling 23A — quoted in part for production materials not becoming an ingredient or component
• December 28 and September 25 Board letters — described but not reproduced
• December 30, 1960 request; contracts; title records; film; certificate; invoices; copies; prints; permit; returns; audits; and outcomes — described or implicated but not included

Verbatim support

From the official January 5, 1961 Tax Counsel letter:

You informed us that in the case of your client, the film becomes the property of the client when the process of microfilming is completed.

In this situation, i.e., where the film itself is sold to the customer, we are of the opinion that the microfilmer may purchase the film ex tax with a resale certificate.

This, of course, applies only where the film so purchased is in turn sold to the microfilmer's customers.

The tax would apply to the purchase of film by the microfilmer if the microfilmer retains the property in the film and merely sells copies or prints which are produced from the films.

As stated in our letter of September 25, the tax will apply to the sale of the film to the microfilmer's customer.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 420.0140
• Original supporting opinion: 420.0140 PDF

Original ruling text

420.0140

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

January 5, 1961

Gentlemen:
We have received your letter of December 30, 1960, regarding the purchase of unexposed microfilm by your client. In our letter of December 28, we advised you Sales and Use Tax Ruling 23 applies to microfilming and that your client would, therefore, be required to hold a seller's permit and report the tax on the charges for microfilming. Ruling 23A, which applies in express terms to photographers and photostat producers, provides that sales tax applies to " ... sales to the photographer or producer of materials used in the process of making the photographs and photostat copies and not becoming an ingredient or component part thereof, such as chemicals, trays, films, plates, proof paper, and cameras." In the normal operation, the film negative is retained by photographers and photostat producers, and a print made from the negative is sold to the client. You informed us that in the case of your client, the film becomes the property of the client when the process of microfilming is completed. In this situation, i.e., where the film itself is sold to the customer, we are of the opinion that the microfilmer may purchase the film ex tax with a resale certificate. This, of course, applies only where the film so purchased is in turn sold to the microfilmer's customers. The tax would apply to the purchase of film by the microfilmer if the microfilmer retains the property in the film and merely sells copies or prints which are produced from the films. As stated in our letter of September 25, the tax will apply to the sale of the film to the microfilmer's customer. We hope that the above will sufficiently answer your questions. If you have further inquiries, please advise us. Very truly yours, E. H. Stetson Tax Counsel By Roy Gill RG/o'b

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