Which chemicals used to make vinyl sheeting and coated fabrics could be bought for resale?

Plain-English summary

The Board considered whether seven categories of chemicals used in vinyl sheeting and vinyl-coated fabrics were taxable manufacturing aids or components bought for resale.

It accepted resale treatment for methyl ethyl ketone (MEK), nitropropane, acetone, toluene, isopropyl acetate, and stearic acid. Mineral spirits—identified as lactol spirits and lacquer diluent—remained taxable manufacturing aids.

The memorandum explained that a prior staff letter had treated some of the same chemicals as taxable before the Board decided the petition. It directed deletion of the earlier Toluene Annotation 440.3520 as premature and called for the Board's actual classification to be annotated, while warning that the same chemicals could receive different treatment in other manufacturing processes.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/440-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/440-3520.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. Glenn L. Rigby

From:

Donald J. Hennessy

Subject:

W. R. G--- & C---.

440.3520

Date:

May 19, 1976

S- -- XX XXXXXX

Chemicals Used in Manufacturing Polyvinyl Chloride Sheeting

On March 25, 1976, the Board heard the petition of W. R. G--- & C---. (G---) on the issue of whether MEK (methyl ethyle ketone), nitropropane, acetone, toluene, IPA (isopropyl acetate), mineral spirits (lactol spirits and lacquer diluent), and stearic acid were merely manufacturing aids used in the production of vinyl sheeting and vinyl coated fabrics. G--- contended that such chemicals are an essential component of the vinyl sheeting and vinyl coated fabrics and are properly purchased for resale. The Board accepted G---’s contentions and ordered that the redetermination consider all of the chemicals, with the exception of the mineral spirits, as properly purchased for resale. This decision requires annotation as some of the same chemicals as used in other processes are annotated as taxable manufacturing aids. Annotation 440.3520, Toluene, should be deleted. I issued the letter on which Annotation 440.3520 is taken on July 15, 1975 based on my G--hearing report. In light of the Board’s decision, the annotation was obviously premature.

DJH:lb