Was a seller's charge taxable for calibrating and sealing a new tank semitrailer, and could transportation be excluded?

Plain-English summary

A seller calibrated and sealed a 6,000-gallon semitrailer at its oil-company customer's request. The work used a known liquid quantity, marked gallonage at different levels, and sealed the measuring apparatus against alteration.

The total charge was taxable either as producing, fabricating, or processing under section 6006(c), or as a service that was part of the sale under section 6012.

Transportation could be excluded only if it carried the trailer after title had passed to the customer. The available facts did not establish when title passed, so the letter referred to Ruling 58 without deciding that component.

Citations and references

• California Revenue and Taxation Code sections 6006(c) and 6012 (as cited)
• California Sales and Use Tax Ruling 58 (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/435-0520.pdf

Original ruling text

435.0520

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
March 19, 1952
X------------------------

Gentlemen:
This is in answer to your letter of February 5 regarding the application of the sales tax to charges made by you to an oil company to which you sold a 6,000 gallon semitrailer for having the semi-trailer calibrated and sealed as requested by your customer. It appears that this operation represents either “producing, fabricating, processing
…of tangible personal property for a consideration for consumers …” within the meaning of Section 6006(c) of the Sales and Use Tax Law which defines such producing, fabricating, or processing as a sale, or that the operation is included in that portion of Section 6012 which defines gross receipts subject to tax as including “Any services that are a part of the sale”. We understand that the operation consists of placing a known quantity of liquid in the tank and then by appropriate markings showing the gallonage at various levels and then sealing the measuring apparatus so that it cannot be changed. Apparently you performed at least a portion of the labor involved for which you made the charge and, the transportation charge is presumably the delivery of the truck to the customer. In view of the sections of the law above referred to, it is our opinion that your total charge is taxable, subject to the possibility that the charge for transportation could be excluded from the measure of the tax if it is a fact that the charge was for transporting a truck after title thereto had passed to your customer. Without further information we cannot determine the point at which your customer took title to the truck. In this connection see Sales and Use Tax Ruling 58, copy enclosed. Very truly yours

E. H. Stetson
Tax Counsel
EHS:ph