Were charges taxable for screening and separating customer-furnished rock, and what if the work also included crushing or mixing?

Plain-English summary

Screening, hand sorting, or otherwise separating customer-furnished rock or gravel by size did not by itself amount to taxable fabrication or processing. A charge solely for that work was not taxable under the memorandum's analysis.

Crushing rock or mixing it with other ingredients was taxable processing. If taxable crushing or mixing was combined with sorting, the total charge was taxable unless a specific portion of the material was only sorted or separated and the charge for that work could be separated from the taxable processing charge.

Citations and references

• No numbered statute or regulation was cited in the source memorandum.

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/435-1460.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Los Angeles District – District Principal
Auditor (JTQ)

From:

Tax Counsel (EHS) - Headquarters

Subject:

Fabrication Labor

435.1460

Date:

November 14, 1966

Confirming my telephone conversation today with Mr. C---, this is to inform you that if the only labor performed by R--- Inc., on the materials to be incorporated into real property by P--- K--S---’ Company is screening and separation, the tax will not be applicable to the charges therefore. We have always held that sorting of sizes, whether by screening, hand sorting, or otherwise, does not amount to a taxable fabrication or processing. On the other hand, the crushing of rock or mixing of it with other ingredients is considered taxable processing. If there is such processing involved, the total charge therefore would be taxable unless some specific portion of the material is only sorted or separated and the charge for such sorting and separating can be separated from the charge for taxable processing. Only in that case would the charge for sorting and separating be excluded from the measure of the tax.

EHS:fb