Were a nondealer's charges taxable for painting custom murals on vehicles classified as new or used by time since first DMV registration?

Plain-English summary

A nondealer painted custom murals on vehicles the source described as new or used based on whether 60 days had passed since first DMV registration.

The charges were nontaxable for both categories. California did not regard mural painting as creating or producing tangible personal property or as a step in such production.

The memorandum distinguished painting from physical modifications to a new van, which could be part of producing tangible property.

Citations and references

• California Sales and Use Tax Regulation 1526(b) (as cited)
• Sales and Use Tax Annotations 345.0060 and 435.0470 (corrected numbers stated in the source)

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/435-1166.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. Alan Giorgi
Return Review

From:

Gary J. Jugum
Assistant Chief Counsel

Subject:

Murals Painted on Vehicles

435.1166

November 15, 1988

This is in response to your memorandum of November 1, 1988. We understand that you are concerned with a taxpayer who does custom paintings (murals) on vehicles. The taxpayer is not an automobile dealer. He does murals on used vehicles (vehicles for which 60 days have passed since first being registered with DMV) and new vehicles (vehicles for which 60 days have not passed since first being registered with DMV). You are aware of Annotation 345.006 and 435.047. Annotation 345.006 states that charges for lettering signs on trucks or automobiles are nontaxable whether the vehicle is new or used. Annotation 435.047 deals with van conversions and establishes a distinction between new and used vehicles. Tax does not apply to charges made by the taxpayer for painting murals on vehicles, whether the vehicles are new or used. The annotation which applies in this case is Annotation 345.006. Painting a mural on a vehicle is not an operation which results in the creation or production of tangible personal property or a step in a process or series of operations resulting in the creation or production of tangible personal property. See Regulation 1526, paragraph (b). Where physical modifications are made to a new van, the modifications are considered to be a step in the creation or production of tangible personal property.

GJJ:sr
The annotation numbers cited above are both missing the
following zero. The correct numbers are 345.0060 and 435.0470. SUTD Annot. Coord. 4-18-06.