When did a 1967 California letter treat charges for retouching portrait negatives as taxable or nontaxable?

Plain-English summary

The November 3 letter said the tax treatment of negative-retouching charges depended on whether the portrait photographer consumed or resold the retouched negative.

For a single negative that the photographer did not separately charge to the customer, the letter treated the photographer as the consumer. Retouching that customer-furnished property was taxable processing under sections 6006(b) and 6007.

Based on the photographer's original description, the letter assumed that when more than one negative was required, the photographer separately charged for and sold all of those negatives. It therefore treated retouching those assumed resale negatives as nontaxable.

That second conclusion did not survive the agency's later factual clarification. The November 21 letter published for Annotations 420.0100 and 420.0620 states that the "extra poses" charge reimbursed retouching and handling costs rather than selling negatives, and expressly supersedes the November 3 conclusions.

Live annotation and source posture

The current live annotation preserves sections 6006(b) and 6007, taxable retouching when the photographer consumes a negative, nontaxable fabrication when a negative is separately sold, and the November 3, 1967 date. It does not disclose that the resale branch rested on an assumed charge for every additional negative or that the official November 21 letter expressly superseded the November 3 conclusions after the photographer clarified the extra poses facts.

The November 21 source, separately published under Annotations 420.0100 and 420.0620, is the controlling later document within this exchange. It says the extra-pose charges reimbursed negative retouching, handling and recordkeeping rather than selling negatives, and taxes all negative-retouching charges. This page preserves the November 3 historical analysis while placing its supersession prominently rather than presenting the live text as unqualified guidance.

The supporting PDF supplies no October 18 inquiry, photographer or customer identity, portrait, single or multiple negative, lead-pencil retouching, retoucher invoice, separate customer charge, negative transfer, resale evidence, tax return, audit, assessment, refund or applied outcome. The single-negative branch and assumed multiple-negative branch are stated, but the source record necessary to test either is absent.

CDTFA's Annotated Legal Opinions collection says 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-one 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 the fresh extraction after removal of only the extractor's terminal newline and form feed.

What this means for you

Do not rely on a separately labeled pose or negative charge without proving that ownership of the negative actually transfers. Here, later facts showed that the charge reimbursed overhead and did not sell the negative, eliminating the November 3 resale premise.

Common questions

Q: What made retouching taxable under the November 3 letter?

A: The photographer consumed the negative, so retouching customer-furnished property was taxable processing under section 6006(b).

Q: What made retouching nontaxable under its alternate branch?

A: An assumed separate customer charge and sale of the retouched negative for resale.

Q: Why was that alternate branch superseded?

A: The photographer later explained that extra-pose charges reimbursed retouching, handling and recordkeeping costs rather than transferring negatives.

Q: Does the current live 420.0640 page show the supersession?

A: No. The warning comes from the official November 21 letter linked above.

Missing evidence and references

• October 18 taxpayer inquiry — described but absent
• November 21 superseding letter — available under formal Annotations 420.0100 and 420.0620
• Portraits, negatives, retouching, separate charges, transfers, tax filings and outcomes — implicated but absent

Verbatim support

From the official November 3, 1967 Tax Counsel letter:

The answer to this question depends on whether or not you sell the retouched negatives to your customers.

We understand, from your letter, that where only one negative is required by a particular customer, you do not make a separate charge for the negative. On the other hand, where more than one negative is required, you will charge him for all negatives.

Since you do not charge your customers for single negatives, you are the consumer thereof, and the retouching constitutes processing or fabrication under Section 6006(b), the charges for which are subject to sales tax.

Where you make a separate charge to your customer for negatives, you are the seller thereof and not the consumer.

Citations and references

• California Revenue and Taxation Code §§ 6006(b) and 6007

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 420.0640
• Original supporting opinion: 420.0640 PDF
• Later official source superseding the multiple-negative conclusion: November 21 letter

Original ruling text

STATE OF CALIFORNIA

420.0640

STATE BOARD OF EQUALIZATION
November 3, 1967

Gentlemen:
This is in reply to your letter of October 18, 1967.
It is our understanding that you are in the portrait photography business. The negatives frequently require retouching. You send the negatives to persons in the business of retouching who cover up various defects in the negatives by means of lead penciling. The question has been raised as to whether the charges made to you by those retouchers for retouching the negatives are subject to sales tax. The answer to this question depends on whether or not you sell the retouched negatives to your customers. We understand, from your letter, that where only one negative is required by a particular customer, you do not make a separate charge for the negative. On the other hand, where more than one negative is required, you will charge him for all negatives. Under Section 6006(b) of the Revenue and Taxation Code, the producing, fabricating or processing of tangible personal property for a consideration for consumers who furnish, either directly or indirectly, the materials used constitutes a sale. Under Section 6007, a sale for any purpose other than resale in the regular course of business is a retail sale. Since you do not charge your customers for single negatives, you are the consumer thereof, and the retouching constitutes processing or fabrication under Section 6006(b), the charges for which are subject to sales tax. Where you make a separate charge to your customer for negatives, you are the seller thereof and not the consumer. Since you are the seller, the retouching of such negatives is for the purpose of resale, and the charges to you for retouching such negatives are not subject to sales tax. Very truly yours,

George A. Trigueros
Tax Counsel
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