Was a manufacturer's charge taxable when it removed impurities and reprocessed unwanted paint that a county had collected and mixed from many donors?

Plain-English summary

A county collected unwanted paint from individuals, mixed it with paint from other donors, and sent it to a manufacturer. The manufacturer removed impurities and otherwise reprocessed the paint, then returned it for county use or distribution to individuals.

California's definition of a sale included processing tangible property for a consumer who directly or indirectly furnished the material. The letter distinguished nontaxable purification of a customer's own beeswax from taxable reconditioning that commingled material furnished by several customers.

Because the county's paint came from many sources, the manufacturer's charge to reprocess it was taxable.

Citations and references

• California Revenue and Taxation Code section 6006(b) (as cited)
• Sales and Use Tax Annotation 435.1280 (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/435-1384.pdf

Original ruling text

435.1384

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District, Kentfield

450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-3828

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles

May 11, 1993

GRAY DAVIS
Controller, Sacramento

BURTON W. OLIVER
Executive Director

X------------------------Re:

Taxability of Paint Processing

Dear Ms. X----------------:
This office has received a letter from you dated April 15, 1993, in which you questioned the sales tax imposed by a paint manufacturer for processing paint. You state in your letter that X--------------- County has a recycling program in which individuals sometimes drop off unwanted paint at a county facility. The paint is then mixed with other paint obtained from different donors and sent to a paint manufacturer. The paint manufacturer reprocesses the paint removing impurities, etc., and bills the county for this procedure. The paint is returned to the county where it is either used by the county or given to individuals. You ask if the charge to process the paint is subject to tax. California Revenue and Taxation Code section 6006(b) defines "sale" to include 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." California Sales and Use Tax Annotation 435.1280 (4/7/50) provides that the purification of beeswax is not a taxable processing, but if the reconditioning involves commingling of wax furnished by several customers, tax applies to the charge made. Since your office has paint obtained from many sources reprocessed by the paint manufacturer, the charge for processing the paint is subject to tax. Very truly yours,

Thomas J. Cooke
Tax Counsel
TJC:sr