Were charges for embossing a customer's name on milk and ice-cream cans taxable?

Plain-English summary

A business asked about embossing a consumer's name on milk and ice-cream cans.

California treated embossing a new can as a step in producing or fabricating the can, making the embossing charge taxable under the historical ruling cited in the letter.

Embossing used cans furnished by the customer was not taxable. In that situation, however, the engraver was the consumer of the embossing materials. If those materials had been bought tax-free for resale, their cost had to be reported as self-consumed merchandise on the sales-and-use-tax return.

Common questions

Was embossing a new can taxable?

Yes. The source treated the work as taxable fabrication.

Was embossing a used customer can taxable?

No, but the engraver consumed the materials used in that work.

What if those materials were originally bought ex-tax for resale?

The source required their cost to be reported as self-consumed merchandise.

Citations and references

• Historical California Sales and Use Tax Ruling 15

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/430-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/430-0100.pdf

Original ruling text

430.0100

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

January 26, 1950

J. F. R--XXXX --- Rd.
--- --- XX, Calif.

• XXXXXX
  File destroyed 7-62

Gentlemen:
This is in answer to your letter of January 20 with respect to the application of the state sales tax to your charges for embossing a consumer’s name on milk and ice cream cans. It is our opinion that the embossing of a consumer’s name on a new milk or ice cream can is a step in the production or fabricating of the milk or ice cream can, within the meaning of Sales and Use Tax Ruling 15, copy enclosed. Accordingly, we regard your charges for embossing new cans as subject to tax. Where the embossing is on used cans furnished by your customer, we do not regard the tax as applicable. You will be regarded as the consumer of the materials used in embossing the used cans. Accordingly, if the materials so used have been purchased on a tax-free basis for the purpose of resale, you should include the cost price of the materials which you used in embossing used cans at line two of your sales and use tax return, as self-consumed merchandise. Very truly yours,

R. G. Hamlin
Associate Tax Counsel

RGH:hb

cc:

Burnett Sheehan
FABRICATION, ETC.
“Embossing”