When was petroleum-tank calibration a nontaxable information service, and when did furnishing a gauge stick or template make the full charge taxable?

Plain-English summary

California treated tank calibration as a nontaxable service when the provider computed liquid quantities at various levels and furnished only the resulting information, even in a written report.

The result changed when the computations were made to furnish a tape used as a pattern or template, a gauge stick, or similar tangible property. The customer then wanted the physical item, not merely information.

Section 6012 made the full charge for tapes and gauge sticks taxable without deduction for the calculation labor used to produce them.

The source PDF is formally dated May 25, 1970. The official annotation page instead prints February 2, 1951, so the supporting opinion's own date is used here.

What this means for you

Calibration and measurement businesses

Information-only reports were treated differently from physical tools made from the calibration results.

Accountants and tax professionals

Document the customer's objective, calculations, report, tapes, gauge sticks, templates, title transfer, and full charge.

Common questions

Q: Was calibration with only a written report taxable?

A: No.

Q: Was a calibration charge taxable when it produced a gauge stick?

A: Yes, in full.

Q: Which issue date does this page use?

A: May 25, 1970, the formal date of the released opinion.

Citations and references

• California Revenue and Taxation Code § 6012

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 515.0410
• Original supporting opinion: 515.0410 PDF

Original ruling text

515.0410

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

May 25, 1970
Mr. J--- O--- W--XXXX --- Street
--- --- X, California
Re:

Mr. A--- S---

Dear Mr. W---:
This is in answer to your letters of November 13 and December 29 in which you requested a reconsideration of our letter of November 2 with respect to the application of the state sales tax to the activities of the above-named individual. You are advised that we have always regarded retail sales of patterns, templates, dies, and similar articles as subject to the tax, regardless of the professional status of the producer of such tangible personal property. Although the computations made by your client and the furnishing of a report thereof may be analogous to an accountant who performs services and summarizes his findings in a report, we are unable to concede that the same is true when your client makes computations for the purpose of furnishing a tape which is used as a pattern or template, or a gauge stick. Thus, the report furnishes only information, but the tape or gauge stick constitutes the very property required by your client’s customers. In the latter case it is our opinion that the transaction constitutes a sale of the property rather than the furnishing of information. Section 6012 of the Sales and Use Tax Law defines gross receipts to mean the total amount of the sales price of the retail sale of retailers without any deduction on account of the cost of materials used, labor or service cost, or any other expense. Accordingly, it appears to us that your client is subject to the tax measured by his full charge for tapes and gauge sticks, without deduction on account of his labor in making the calculation required in connection therewith. As we stated in our previous letter it is our opinion that the tax does not apply to any part of Mr. S---’s charges where he makes computations of the quantity of liquid in a tank at various levels if he merely furnishes the information to his client, although the information may be conveyed by a written report. Very truly yours,

R. G. Hamlin
Associate Tax Counsel
RGH:HB
cc:
Burnett Sheehan