Which charges were taxable when a business prepared and served subpoenas duces tecum and then copied the subpoenaed records?

Plain-English summary

A business prepared and served subpoenas duces tecum, obtained subpoenaed records and sold photocopies. In a May 18 letter it enclosed two competitor invoices and said either its Board advice was wrong or the competitor undercharged tax. The competitor labeled untaxed lines basic charge and subpoena prep; the requester called subpoena preparation a service charge that Board staff had told it was taxable, while also taxing its own basic record-obtaining charge.

Section 7056 prevented Tax Counsel from commenting on the competitor's particular invoices. The letter instead stated the general rules and asked a redacted Board office to discuss correct treatment with the competitor; no follow-up appears.

The letter said amounts fairly allocated to actually preparing and serving a subpoena were nontaxable under Regulation 1528(a)(2), regardless of whether the invoice called them service or subpoena-preparation charges.

The basic charge for obtaining the records was taxable because it was a service that formed part of the later photocopy sale. The source also explained that sales tax was imposed on the seller; separately charging reimbursement to the customer was optional under the contract and did not determine whether the seller had to report taxable gross receipts.

Source posture and live annotation

The source provides no May 18 inquiry, requester or competitor identity, competitor invoice, requester invoice, subpoena, preparation record, proof of service, medical or other subpoenaed record, photocopy, fair-allocation method, service/basic/copy amount, customer contract, tax-reimbursement term, return, reported gross receipts, Board-office discussion, audit or later outcome. It quotes Regulation 1528(a)(2) and says a copy was enclosed, but CDTFA's two-page PDF does not reproduce it.

The live 420.0178 annotation, in the 2026 revision of the Business Taxes Law Guide, closely retains the basic charge, subpoena-preparation and service distinction, fair allocation, label-independence, photocopy-sale link and July 25, 1988 date. It presents a taxpayer billing both basic charge and subpoena prep, while the source distinguishes those competitor labels from the requester's service charge label before stating a general rule. It omits the competitor dispute, section 7056 confidentiality bar, seller-versus-customer tax reimbursement, taxable-reporting duty, quoted medical-record rule, Board-office referral, missing invoices and enclosure, and absent 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 two-page PDF has a clean native text layer and one page-1 letterhead image 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

Subpoena, process-service and record-copy businesses

Use contemporaneous time and task records to support a fair allocation to actual subpoena preparation and service. A favorable label alone is insufficient. Separately track record acquisition and photocopy production, and distinguish the seller's tax-reporting duty from any contractual decision to charge tax reimbursement to the customer.

Common questions

Q: Did calling a line service charge make it taxable?

A: No. Fairly allocated actual subpoena preparation and service remained nontaxable regardless of label.

Q: Why was the basic charge taxable?

A: It paid for obtaining records used in the ensuing photocopy sale, making the service part of that sale under section 6012(b)(1).

Q: Did the Board decide whether the competitor's invoices were correct?

A: Not in the letter. Section 7056 barred disclosure or comment about that taxpayer, and a Board office was asked to follow up separately.

Q: Must the seller separately bill sales-tax reimbursement?

A: No. The letter called reimbursement optional by contract, while keeping the seller responsible for correctly reporting and paying tax on taxable gross receipts.

Q: Did the source identify any amounts or allocation method?

A: No. It states the fair-allocation rule but supplies no invoice values, hours, tasks or applied result.

Citations and references

• California Revenue and Taxation Code section 7056 — cited for taxpayer confidentiality
• California Revenue and Taxation Code section 6051 and Civil Code section 1656.1 — cited for seller tax and optional customer reimbursement
• California Revenue and Taxation Code section 6012(b)(1) — cited for a service forming part of the photocopy sale
• California Sales and Use Tax Regulation 1528(a)(2) — quoted for subpoena preparation and service; described as enclosed but not reproduced
• May 18 inquiry; identities; invoices; subpoenas; service records; subpoenaed records; copies; allocations; contracts; returns; Board follow-up; audits; and outcomes — described or implicated but not included

Verbatim support

From the official July 25, 1988 Tax Counsel letter:

Therefore, we will not comment in this letter on the application of tax to the invoices from REDACTED TEXT which you enclosed with your letter.

Even when a taxpayer does not charge sales tax reimbursement on its invoices, the Board’s concern is not with that issue, but rather whether the taxpayer is correctly reporting and paying to the Board its taxable gross receipts.

Thus, regardless of what a taxpayer calls this service, charges which are fairly allocated to the actual preparation of a subpoena, as well as service of subpoenas, are nontaxable charges.

Your basic charge is subject to tax however, since it is a service which is a part of the sale of the photocopies you made following the service of the subpoena duces tecum.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 420.0178
• Original supporting opinion: 420.0178 PDF

Original ruling text

420.0178

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001
TELEPHONE (916) 445-6493

July 25, 1988

REDACTED TEXT
REDACTED TEXT
Preparation and service of subpoenas duces tecum
Dear REDACTED TEXT:
In your letter of May 18, 1988 to the Board, you enclosed two invoices issued by your competitor, REDACTED TEXT of REDACTED TEXT. You write in summary that either you have received incorrect advice from the board regarding the manner in which sales tax applies to the charges you make to your customers for preparing and serving subpoena duces tecum and copying the records subpoenaed, or REDACTED TEXT is undercharging sales tax on its similar services. The difference which you note is that REDACTED TEXT does not charge sales tax on two items on its invoices referred to as a “basic charge” and as “subpoena prep.” On the other hand, your invoices refer to subpoena preparation as a “service charge” and you have been informed by Board staff that this charge is taxable. You also charge tax on your “basic charge,” which is the charge for obtaining the records to be copied. Opinion We first note that under the confidentiality provisions of Revenue and Taxation Code Section 7056, the Board is prohibited from disclosing information which relates to a particular taxpayer to anyone else (with exceptions not relevant here). Therefore, we will not comment in this letter on the application of tax to the invoices from REDACTED TEXT which you enclosed with your letter. We also note that what you refer to as sales tax, is actually sales tax reimbursement which may be, but is not required to be, charged by a taxpayer to its customer. The sales tax is imposed on the seller of tangible personal property, not the purchaser, and the seller may elect to pass on this tax to its customers as sales tax reimbursement. Civil Code Section 1656.1; Revenue and Taxation Code Section 6051. Even when a taxpayer does not charge sales tax reimbursement on its invoices, the Board’s concern is not with that issue, but rather whether the taxpayer is correctly reporting and paying to the Board its taxable gross receipts.

Mr. [S]

-2-

July 25, 1988
420.0178

We can, however, describe the correct application of tax to your charges for the preparation and service of subpoenas and for copying records. Sales and Use Tax Regulation 1528(a)(2), provided in part as follows: “The preparation and service of a subpoena duces tecum is an exempt service. The tax does not apply to separately stated charges for the service even though the subpoena is served in connection with the performance of a contract to produce and deliver photostat copies of medical records.” (Emphasis added). Thus, regardless of what a taxpayer calls this service, charges which are fairly allocated to the actual preparation of a subpoena, as well as service of subpoenas, are nontaxable charges. It does not matter whether the charge is referred to as a “service charge” or a “subpoena preparation” charge. Our view is that you should not report as part of your taxable gross receipts, your charges for the actual preparation of subpoenas. Your basic charge is subject to tax however, since it is a service which is a part of the sale of the photocopies you made following the service of the subpoena duces tecum. (Revenue and Taxation Code Section 6012(b)(1)). By copy of this letter, I am asking the Board’s REDACTED TEXT office to discuss with REDACTED TEXT the correct application of tax on its subpoena duces tecum and copying services. I enclose a copy of Regulation 1528 for your information. Please feel free to contact me if you have any further questions or comments about this letter. Sincerely,

John Abbott
Tax Counsel
JA:jb
Enclosure
cc:

REDACTED TEXT