Were charges taxable for planing and ripping lumber furnished by consumers, and what if the finished lumber would be resold?

Plain-English summary

Planing, ripping, or sawing consumer-furnished lumber was a step in producing or fabricating the finished product, so the charges were taxable under Ruling 15.

The charges were not taxable when customers furnished lumber they would resell in the regular course of business. The processor was instructed to obtain resale certificates showing those customers' seller's permit numbers.

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/435-1200.pdf

Original ruling text

435.1200

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
March 29, 1951

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

Gentlemen:
This is in answer to your letter of March 24 with respect to the application of the State sales tax to your charges for planing and ripping lumber furnished to you by your customers. As indicated by Sales and Use Tax Ruling 15, copy enclosed, the tax applies to charges for producing, fabricating, or processing tangible personal property for consumers who furnish, directly or indirectly, the materials used. As planing and sawing of lumber is regarded as a step in the production or fabrication of the finished product, your charges for performing such operations upon lumber furnished to you by consumers will be subject to the tax. If such operations are performed on lumber furnished to you by persons who will resell the finished lumber in the regular course of their business, the tax will not apply to your charges. In this case, you should obtain resale certificates from such persons indicating their seller's permit number. Very truly yours,

R. G. Hamlin
Tax Counsel
RGH: HE