Who was the consumer of a bronze niche panel's first engraving: the cemetery or the person acquiring the niche-use right?

Plain-English summary

A bronze panel was part of a niche permanently affixed to a cemetery building. When someone acquired a perpetual right to use the niche, the panel was removed, initially engraved with identifying information, returned, and reinstalled.

The cemetery, not the niche user, consumed the engraving. The engraver's charge to the cemetery was taxable processing under section 6006(c) and Ruling 15, while the amount passed through to the niche user was not a separate taxable panel sale because the user acquired a right to use realty.

The first engraving was taxable because the panel was essentially new and had not yet performed its intended memorial function; the used-merchandise engraving rule did not apply.

Citations and references

• California Revenue and Taxation Code section 6006(c) (as cited)
• 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/435-0760.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. X-------------------- (RGS)

From:

E. H. Stetson (WWM)

Subject:

X------------------------

435.0760

Date:

February 26, 1952

As we understand the factual situation, a niche is the name given to the space provided a customer for which he pays to place a container holding cremated remains. Until a niche is "purchased" it is covered by a bronze door or door frame which is affixed thereto by hinges. The center panel of the door or door frame is a sheet of bronze plate affixed to the door frame by screws. The niches are a permanent part of the building, as are the doors and bronze panels, all of which having been apparently included in the general contract covering the erection of the building. When a niche is "purchased", the ashes of the deceased person are placed in the niche, and the door or merely the bronze panel of the door is removed and sent to the firm doing the engraving. This is the initial engraving of the panel. The person's name and in most cases the date of his birth and death are engraved on the panel which is return to the cemetery. The cemetery apparently reinstalls the door or panel on the niche. The question involved, as we understand it, is whether the tax should apply to the charge made by the engraver to the cemetery, or whether the charge for engraving thereafter passed on to the "purchaser" of the niche is the proper measure of the tax. It is our opinion that the charge the engraver makes to the cemetery for the engraving of the bronze panel should be regarded as a taxable processing charge for a consumer pursuant to Section 6006(c) of the California Sales and Use Tax Law and Sales and Use Tax Ruling 15. We believe that the panel is not actually resold to the "purchaser", that he merely acquires a perpetual right to use realty belonging to the cemetery. Accordingly, it is our opinion that the engraving charge "passed on" by the cemetery to the "purchaser" should not be taxable in that the actual consumer is the cemetery. It is also our opinion that the tax should apply to the first engraving because the panel should be regarded as essentially new when the engraving takes place. That is, before the engraving, the panel has not essentially been used. It is when it is first engraved that its usefulness is apparent. Accordingly, we believe that the rule that the tax does not apply to the engraving of used articles is inapplicable. WWM:ja