Was the full charge for converting customer records into delivered rolls of microfilm taxable?

Plain-English summary

A prospective microfilming service said it would reproduce customer records for a price based on record volume and deliver one or more finished microfilm rolls. Junior Counsel saw no sound tax distinction between those rolls and photographs produced to a customer's special order under historical Ruling 24.

The letter therefore treated the proposed business as a film retailer and applied sales tax to the entire microfilming charge. It instructed the requester to obtain a seller's permit, file returns and pay the applicable tax.

Because the finished film stock itself would be delivered to the customer, the business could buy that stock ex tax for resale using the Ruling 68 certificate form. Under historical Ruling 71, tax-paid film stock later resold could qualify for a Tax-Paid Purchases Resold credit.

The letter also gave then-current administrative directions: a $1 seller's-permit fee and application at the Pasadena office at 111 South Hudson Avenue, with two historical telephone numbers. Those instructions describe 1953 procedure only.

Source posture and live annotation

The official source is prospective: it repeatedly says what the requester will do and provides no completed microfilming transaction. It supplies no inquiry, identity, customer, records, volume, film, roll, price, invoice, certificate, supplier, permit application, return, tax computation, credit claim, audit or later outcome. Rulings 24, 68 and 71 are described as enclosed, but CDTFA's one-page PDF reproduces none of them.

The live 420.0160 annotation, in the 2026 revision of the Business Taxes Law Guide, retains only the entire-charge taxable conclusion and July 9, 1953 date. It omits the prospective posture, customer-record and delivered-roll facts, volume-based pricing, special-order photograph analogy, retailer and permit treatment, film-stock resale certificate, tax-paid-purchases-resold credit, three historical rulings, obsolete administrative directions, missing evidence 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

When physical film is delivered, separately analyze the entire customer charge and the acquisition of film stock. Keep resale certificates and evidence that stock was actually transferred. Treat the permit fee, office address, phone numbers and historical rulings in this 1953 letter as context, not present filing instructions.

Common questions

Q: Why was the whole proposed microfilming charge taxable?

A: The letter analogized the delivered rolls to taxable specially ordered photographs and treated the provider as a retailer of film.

Q: Could the service buy film stock ex tax?

A: Yes, because the described finished rolls would pass to customers and the stock therefore would be acquired for resale.

Q: What if tax had already been paid on stock later resold?

A: The letter described a historical tax-paid-purchases-resold credit under Ruling 71.

Q: Is the $1 permit instruction current?

A: This page does not say so. It reports only the amount and application directions printed in the 1953 source.

Q: Did the source show that the business began operating or paid tax?

A: No. It gives prospective facts and no permit, transaction, return, audit or outcome.

Citations and references

• Historical California Sales and Use Tax Ruling 24 — described for specially ordered photographs, but not reproduced
• Historical California Sales and Use Tax Ruling 68 — described for the resale-certificate form, but not reproduced
• Historical California Sales and Use Tax Ruling 71 — described for tax-paid purchases resold, but not reproduced
• Inquiry, customer records, film, orders, invoices, certificates, permits, returns, credits, audits and outcomes — described or implicated but not included

Verbatim support

From the official July 9, 1953 Junior Counsel letter:

You will microfilm a customer's records for a price based on the volume of records to be reproduced. The finished product delivered to the customer is a roll or rolls of microfilm.

We can see no sound basis for distinguishing between microfilm and ordinary photographs. Accordingly, the sales tax applies to your entire charge for microfilming records.

As a retailer of film, you may purchase film stock ex tax for resale.

If you have purchased film stock tax paid, you will be entitled to a credit for "Tax-Paid Purchases Resold" as explained in Ruling 71 (copy enclosed).

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 420.0160
• Original supporting opinion: 420.0160 PDF

Original ruling text

420.0160

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

July 9, 1953 X-----------X------------, California
Dear Mr. X-----------You inquire if your charges for a microfilming service are subject to the sales tax. You will microfilm a customer's records for a price based on the volume of records to be reproduced. The finished product delivered to the customer is a roll or rolls of microfilm. As indicated in Sales and Use Tax Ruling 24 (copy enclosed), sales tax applies to sales of photographs, whether or not produced to the special order of the customer. We can see no sound basis for distinguishing between microfilm and ordinary photographs. Accordingly, the sales tax applies to your entire charge for microfilming records. You will therefore be required to hold a seller's permit (fee $1.00), file sales and use tax returns and pay the applicable tax. You may apply for a seller's permit at our Pasadena office, III South Hudson Avenue, telephones Ryan 1-6675 and Sycamore 39104. A representative at that office will explain in more detail the records required to be kept and the procedure for filing returns. As a retailer of film, you may purchase film stock ex tax for resale. You should furnish your supplier with a resale certificate in the form prescribed in Ruling 68 (copy enclosed). If you have purchased film stock tax paid, you will be entitled to a credit for "Tax-Paid Purchases Resold" as explained in Ruling 71 (copy enclosed). Yours very truly, Bill Holden Junior Counsel BH: ja cc: Pasadena - Compliance