Which book-processing activities were nontaxable professional library services, and which were taxable mechanical processing?

Plain-English summary

California treated three activities as nontaxable professional library services: preparing bibliographic descriptions for classification, assigning or verifying Library of Congress classification numbers, and inspecting or verifying book cards, pocket labels, and catalog cards.

Applying a classification label, card pocket, and college name stamp to each book was different. That work was mechanical processing included in the definition of a sale under section 6006(b), and its price was included in gross receipts under section 6012.

The vendor had to segregate taxable and nontaxable contract receipts in its records to claim a deduction for the professional-service portion.

What this means for you

Library vendors, colleges, and book processors

Professional classification judgment and physical book processing required separate treatment.

Accountants and tax professionals

Separate bibliographic work, classification, verification, labels, pockets, stamps, charges, and supporting records.

Common questions

Q: Were bibliographic and classification services taxable?

A: No.

Q: Was applying labels, pockets, and ownership stamps taxable?

A: Yes.

Q: What records were required?

A: A segregation of taxable and nontaxable receipts.

Citations and references

• California Revenue and Taxation Code §§ 6006(b) and 6012

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 515.1180
• Original supporting opinion: 515.1180 PDF

Original ruling text

515.1180

December 4, 1964

REDACTED TEXT
Dear Mr. REDACTED TEXT,
I regret the delay in responding to your letter of August 24, 1964. It appears from the information contained therein and its enclosures that the items listed in the letter of REDACTED TEXT Business Manager, as follows: “a. b. c.

Bibliographical description of the book for classification purposes. Assignment of, or verification of, the Library of Congress classification number to each book. Inspection and verification of book card, pocket label and Library of Congress catalogue cards.”

constitute nontaxable professional library services.
Item (d), “Application of classification label, card pocket and college name stamped in book,” appears, however, to be a mechanical processing which we believe is included within the definition of “sale” in section 6006(b) of the Sales and Use Tax Law, and the price paid therefore as included within the definition of “gross receipts” in section 6012. There must be a segregation made in the records of the REDACTED TEXT Company of its receipts from the taxable and nontaxable portions of its contracts in order for the company to claim a deduction for the nontaxable portion of its receipts. Very truly yours, E. H. Stetson Tax Counsel EHS:fb cc: Inglewood – Subdistrict Administrator New York District Administrator