Ezel / Tax Rulings / CA

Was a fireworks display a nontaxable service when the contractor kept title and possession of the fireworks and its own employees fired them?

Short answer Yes. The contractor was the consumer when it retained title and possession and its employees fired the show; transfer to the sponsor would be taxable.
State
CA
Ruling
Annotation 515.0990
Tax type
Sales and Use Tax
Issued
1981-10-07
Issued by
California State Board of Equalization
Requested by
A fireworks-display contractor (identity redacted)
Topics
fireworks displays event services retained title retained possession contractor consumption
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1981. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1981
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a California State Board of Equalization Tax Counsel opinion dated October 7, 1981, published by CDTFA as support for a sales and use tax annotation. Its service result expressly depends on the contractor retaining title and possession and having its own trained employees explode the fireworks; a California transfer to the sponsor produces the opposite result. Another display company or sponsor should check current fireworks, public-safety, permitting, possession, title, event-service, and sales-and-use-tax rules. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A fireworks contractor proposed a contract under which it supplied the fireworks, mortars, frames, lumber, equipment, tools, and trained personnel needed to present a sponsored display.

California treated the arrangement as a nontaxable service if the contractor retained both title and possession of the fireworks and its own employees actually exploded them. Under those facts, the contractor was the consumer rather than the retailer of the fireworks.

The legal staff recommended that the contract explicitly say the contractor retained title and possession and fired the fireworks as a service.

If the contractor instead transferred title or possession of fireworks to the sponsor in California, the contractor would be their retailer.

What this means for you

Display companies and event sponsors

Contract wording must match actual control of the fireworks. Retained title, retained possession, and contractor-operated firing supported service treatment.

Accountants and tax professionals

Verify title, custody, employee control, sponsor instructions, equipment ownership, unused materials, and any separate property transfer.

Common questions

Q: Was the display charge taxable?

A: No, if the stated conditions were met.

Q: Who was the consumer of the fireworks?

A: The display contractor.

Q: What if the sponsor received title or possession?

A: The contractor would be treated as the retailer.

Source

Original ruling text

515.0990

(916) 445-6450
October 7, 1981
REDACTED TEXT
Dear Mr. REDACTED TEXT,
This is in reply to your August 13, 1981 letter regarding the format for the new contract for REDACTED TEXT. Specifically, you wish to know whether the California Board of Equalization would view the new contract as REDACTED TEXT providing a service for a customer by displaying fireworks rather than REDACTED TEXT selling fireworks to the customer. The relevant contract provisions are: “1. The Contractor does hereby agree to furnish to the Sponsor a fireworks display as follows: “2. In the furnishing of the fireworks display, the Contractor agrees to provide one or more trained personnel to present the said display, such personnel to be the agents and employees of the Contractor, but to act generally under general instructions and directions of the Sponsor provided such instructions and directions do not create any safety hazard for the agent or employee or other persons or property. Except as otherwise provided herein, Contractor shall also provide all fireworks, mortars, frames, sets, lumber, and other equipment and tools necessary for the fireworks display.” As we understand the terms of the contract, REDACTED TEXT employees will retain possession of the fireworks and explode the fireworks for the Sponsor. If such is the intent of REDACTED TEXT, we believe a statement to that effect should be included in the contract. In such case, we suggest the following opening sentence to the second provision in the contract. “2. The Contractor and the Sponsor agree that the Contractor will retain title and possession of the fireworks and will explode the fireworks as a service to the Sponsor. In the furnishing…” In such case, if REDACTED TEXT employees do actually retain possession of the fireworks and explode the fireworks, we believe REDACTED TEXT is providing a service for the Sponsor, and REDACTED TEXT is the consumer rather than the retailer of the fireworks so furnished. Of course, if REDACTED TEXT gives title to, or possession of, fireworks to the Sponsor in California, we will consider REDACTED TEXT as the retailer of such fireworks.

515.0990

again.

2

October 7, 1981

We trust this answers your questions. If you need further information, feel free to write Very truly yours, R. L. Dick Tax Counsel

RLD:jw
bc:

Out-of-State – District Administrator
Mr. John Murray (CLD)

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