Was converting a chassis and propane tank into a complete tank truck taxable fabrication or repair and installation?

Plain-English summary

A shop installed a propane tank on a truck chassis and made and installed fenders, skirts, a toolbox, brackets, and other parts needed to create a completed tank truck.

If the chassis was new, the entire operation was a fabrication step and the full charge was taxable.

If the chassis and equipment were used, the conversion was not fabrication of a new truck under Ruling 15. Tax applied to fabricated articles, parts, and other materials supplied, but not to installation charges.

Citations and references

• California Sales and Use Tax Ruling 15 (as cited)

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/435-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/435-0440.pdf

Original ruling text

STATE BOARD OF EQUALIZATION
OFFICE CORRESPONDENCE

435.0440
Place:
Date:

To:

Mr. L. H. Wilson

From:

R. G. Hamlin

Re:

Application of Tax to Assembly Labor

Sacramento, California
January 24, 1951

You have inquired as to the application of the tax to a transaction in which a petroleum distributor takes a truck chassis and a propane tank to a shop to have a tank truck made. It appears that the shop not only installs the propane tank on the chassis, but also makes and installs the fenders, skirts, tool box, brackets and other parts required to convert the chassis into a completed tank truck. Your letter does not indicate whether or not the chassis or tank is new or used. Assuming that the chassis is new, it is our opinion that the entire operation constitutes a step in the fabrication of a completed tank truck and that the full charge is subject to the tax. If the truck chassis is not new and the operation consists of rebuilding or converting used equipment owned by the petroleum distributor, we would not regard the operation as the fabrication of a truck, within the meaning of Ruling 15. In this event, the tax will apply to the retail sales price of the fabricated articles and parts, such as tool boxes and fenders, etc. and other materials furnished, but not to installation charges.

RGH:HB