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How did California tax fabrication labor split between work and customer delivery inside California and work and delivery outside the state?

Short answer California taxed the fabrication charges tied to California work and California delivery, but not the out-of-state work delivered outside California. Payment location did not matter.
State
CA
Ruling
Annotation 435.0123
Tax type
Sales and Use Tax
Issued
1995-12-18
Issued by
California State Board of Equalization
Requested by
A requester asking how California tax applied when fabrication labor and customer delivery occurred partly inside and partly outside California
Topics
fabrication labor customer furnished property california delivery out of state delivery
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1995. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1995
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a California State Board of Equalization assistant-chief-counsel letter dated December 18, 1995, published by CDTFA as support for a sales and use tax annotation. It gives a brief general answer and assumes California fabrication corresponds to California delivery while out-of-state fabrication corresponds to out-of-state delivery. Another taxpayer should not treat it as binding and should check current fabrication, customer-furnished-property, delivery-location, interstate-commerce, and sales-and-use-tax rules. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

California treated producing, fabricating, or processing customer-furnished tangible property for consideration as a taxable sale of fabrication labor.

When part of the work was performed in California and delivered to the purchaser in California, those charges were subject to California sales tax. Charges for work performed outside California and delivered outside California were not.

The place where the customer tendered payment did not change that allocation.

Citations and references

  • California Revenue and Taxation Code section 6006(b) (as cited)

Source

Original ruling text

435.0123

STATE OF CALIFORNIA

JOHAN KLEHS
First District, Hayward

STATE BOARD OF EQUALIZATION
LEGAL DIVISION - MIC: 82
450 N STREET, SACRAMENTO, CALIFORNIA
(P. O. BOX 942879, SACRAMENTO, CA 94279-0082)
TELEPHONE: (916) 445-3723
FAX: (916) 323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento

December 18, 1995

BURTON W. OLIVER
Executive Director

Mr. J--- C--S--- T--- R--- G--XXXXX --- Circle, Suite XXX
---, CA XXXXX
Dear Mr. C---:
This is in reply to your letter of December 7, 1995.
Generally, California does not tax service transactions. However, we do tax certain transactions that involve labor service only. Under Revenue and Taxation Code section 6006(b), the term “sale” is defined to include the producing, fabricating, or processing of tangible personal property furnished by a consumer. Thus, “fabrication labor” is taxable in California, if done for a consumer. Where fabrication labor is performed within California and outside California, with delivery to the purchaser taking place inside California and outside California, respectively, California sales tax applies to the California charges, not to the out-of-state charges, without regard to where payment is tendered. Very truly yours,

Gary J. Jugum
Assistant Chief Counsel
GJJ:sr

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