Was inscribing graduates' names on high-school diplomas taxable when the school supplied the diplomas?

Plain-English summary

A high school supplied diplomas to a business that was paid to inscribe each graduate's name. Section 6006(b), as quoted in the letter, treated producing, fabricating, processing, printing, or imprinting customer-furnished tangible personal property for consideration as a sale.

The letter concluded that inscribing the names was therefore a taxable sale even though the school supplied the diplomas.

It also said the inscriber had to obtain a seller's permit and report and pay sales tax if it qualified as a retailer. Under the historical section 6019 definition quoted by reference in the letter, that meant making more than two retail sales during a 12-month period.

Citations and references

• California Revenue and Taxation Code section 6006(b) (as cited and quoted)
• California Revenue and Taxation Code sections 6015 and 6019 (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/435-1260.pdf

Original ruling text

435.1260

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

June 24, 1968

--- --- ----- --- ----- --- --Dear Mr. ---:
This is in reply to your letter of June 19 inquiring about the taxability of inscribing the names of high school graduates on diplomas supplied you by the high school. Among the definitions of “sale” in Section 6006 of the Sales and Use Tax Law, part (b) of that section includes: “The producing, fabricating, processing, printing or imprinting of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the producing, fabricating, processing, printing or imprinting.” In our opinion, the inscribing of the names would constitute a sale. Retailer is defined in Sections 6015 and 6019 of the Sales and Use Tax Law (copy enclosed). Section 6019 defines a retailer as a person making more than two retail sales during any 12-month period. If you are a retailer, you are required to obtain a seller’s permit and report and pay sales tax. If you have any further questions, do not hesitate to write to us again, or you may contact our nearest district office at 2601 Long Beach Boulevard, Long Beach, telephone 636-1206. Very truly yours,

Philip R. Dougherty
Tax Counsel
PRD:smk

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