Was a charge for engraving new merchandise taxable when the university customer supplied the items?

Plain-English summary

A university furnished merchandise to an engraver for marking. California concluded that the engraving charges were taxable when the merchandise consisted of new items and the university was the consumer.

The source relied on section 6006(c), which included producing, fabricating, processing, printing, or imprinting customer-furnished tangible property within taxable sales, and on historical rulings specifically addressing engraving.

The opinion did not give a blanket answer for used property. It said the agency generally distinguished new from used articles and requested further detail about prior use if the engraved items were not newly acquired.

Common questions

Did customer ownership of the merchandise make engraving nontaxable?

No. The source treated engraving new consumer-furnished items as taxable fabrication or processing.

Did the same answer automatically apply to used items?

No. The letter said used-article treatment could differ and depended on additional facts about prior use.

Citations and references

• California Revenue and Taxation Code section 6006(c)
• Historical California Sales and Use Tax Rulings 15 and 24

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/430-0140.pdf

Original ruling text

430.0140

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

July 26, 1950

Gentlemen:
This is in answer to your letter of July 14, 1950 referring to a previous inquiry made under date of May 18, 1950 to our Oakland District Office. This inquiry was referred to this office. Pursuant to Section 6006 (c) of the Sales and Use Tax Law the sales tax applies to charges for, "The producing, fabricating, processing, printing, or imprinting" of tangible personal property furnished by the consumer. In furtherance of this provision of the statute, Sales and Use Tax Ruling 15 has been adopted, and a copy of that ruling is enclosed. Ruling 24, copy also enclosed, specifically provides that the tax applies to charges made for engraving property furnished by the customer. It is our opinion, therefore, that the tax applies to the charges made for marking merchandise by engraving, where the merchandise is furnished by the University as the consumer. We understand from your inquiry that the items which are marked by engraving are new items. In general we have differentiated in the application of the tax to charges for engraving in similar operations as between new articles and used articles. If the articles in question are other than newly acquired articles it is suggested that you furnish us with further detail as to the use made of the articles before the engraving thereon is performed. Very truly yours,

EHS:AMD

E. H. Stetson
Tax Counsel