Did California tax repainting a removable sign when its copy changed?

Plain-English summary

California concluded in 1951 that repainting a removable sign because its copy changed effectively produced a new sign. Tax therefore applied to the seller's gross receipts from the sign.

The same letter treated painting or lettering directly on real property, such as a building, differently: the painter was the consumer of the materials, and the charge to the customer was not taxable. It likewise said automobile lettering was not taxable, whether new or replacing worn lettering, with the letterer treated as the materials' consumer.

The opinion also said a photographer could not deduct travel, equipment rental, model wages, or similar expenses from the taxable charge for photographs.

Common questions

Was repainting a removable sign for new copy taxable?

Yes. The opinion treated it as a new sign rather than a repaired sign.

Did the same treatment apply to lettering on a building or automobile?

No. Under the historical rulings cited, the painter or letterer was the consumer of materials used for those jobs.

Could a photographer deduct model and travel expenses from the taxable charge?

No. The letter applied tax to the entire charge in the example presented.

Citations and references

• Former California Sales and Use Tax Rulings 23, 25, and 30

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/470-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/470-0040.pdf

Original ruling text

470.0040

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

August 29, 1951

Mr. M--- K--K--- and S--Certified Public Accountants
XXX --- --- Boulevard
--- ---, California
Dear Mr. K---:
This is in reply to your letter of August 14, 1951, in which you ask for information concerning the application of tax to certain charges made by sign painters and photographers. As indicated by Sales and Use Tax Ruling 25, copy enclosed, tax does not apply to charges for painting or lettering on real property, such as a building. In this case the painter or letterer is the consumer of the materials used in such work, and the tax applies with respect to the sale of such property to him. Where the materials consumed in such work have been purchased under a resale certificate without the payment of the California sales or use tax, the cost price of such materials should be reported at line 2 of the painter’s sales and use tax return, as self-consumed merchandise. We do not regard the tax as applicable to charges for lettering on an automobile, and accordingly it is immaterial whether the lettering is for the first time, or is to replace the original lettering which has worn off. The letterer is the consumer of the materials used, and tax applies to the sale of the materials to him. Where a removable sign is repainted because of a change in copy, the sign is in effect a new sign rather than a repaired sign, and tax applies to the gross receipts from the sale of the sign. In addition to Ruling 25 we are enclosing a copy of Ruling 30 which under certain circumstances may relate to sign painters.

Mr. M--- K---

-2-

August 29, 1951
470.0040

You also have asked concerning the application of tax to certain expenses relating to models, transportation and props, which a photographer bills to his customers. As indicated by Sales and Use Tax Ruling 23, copy enclosed, tax applies to charges for photographs without deduction for expenses such as travel time, rental of equipment, or wages paid to models. In our opinion tax applies to the entire charge made by the photographer in the example you mentioned. Very truly yours,

R. G. Hamlin
Tax Counsel

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