When was a public agency taxable on repeated sales of temporary buildings removed from acquired land?

Plain-English summary

A public agency bought federal land containing temporary buildings. It wanted to sell all buildings in one lot to one bidder, but received no such bid and instead sold them in groups of one to ten structures, with removal required by the sale contracts.

The 1954 opinion said sales tax could apply even though selling tangible personal property was not the agency's primary activity. The Board generally regarded a person making three or more substantial tangible-property sales within 12 months as being in the business of selling. Because the agency fell within that standard, the opinion required sales tax on its gross receipts.

The published source contains a later limiting note dated October 30, 1985: "Taxable only if seller severs building from land. Reg. 1596(a)." That condition materially narrows the older conclusion and must be considered before applying it.

What this means for you

Public agencies, property owners, demolition buyers, and tax professionals

Count substantial sales during the 12-month period, identify who physically and legally severs each structure from the land, and apply the later Regulation 1596(a) limitation rather than relying on the 1954 business-frequency statement alone.

Common questions

Q: Could incidental building sales make the agency a seller?

A: Yes. The opinion said selling need not be the person's primary activity.

Q: What frequency standard did the 1954 opinion use?

A: Three or more substantial sales of tangible personal property within 12 months.

Q: Did the source later limit the holding?

A: Yes. Its 1985 note says tax applies only if the seller severs the building from the land.

Q: Why does this page use a 1985 date?

A: The later dated note materially controls the published analysis, while the original 1954 letter remains preserved below.

Citations and references

• California Sales and Use Tax Regulation 1596(a)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 530.0020
• Original supporting opinion: 530.0020 PDF

Original ruling text

530.0020

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
June 18, 1954

Your letter of April 21
Attention:
Gentlemen:
You state that the ______ purchased from the Federal Government certain lands upon which had been constructed temporary buildings. The agency then sold the buildings, the buildings being removed from the land pursuant to the contract of sale. The agency desired to sell all the buildings in one lots to a single bidder. No bids of this type were received and the agency was forced to sell in groups of one to ten structures. The Sales and Use Tax Law applies to retail sales of tangible personal property by persons engaged in the business of selling tangible personal property. A person may be engaged in the business of selling, even though it is not his primary activity and is merely incidental to some other activity. Generally, we have regarded a person making three or more substantial sales of tangible personal property within a 12-month period as being in the business of selling tangible personal property. We understand that you fall within this definition. Accordingly, it will be necessary for you to pay sales tax on your gross receipts from the sales in question. Yours very truly, Taxable only if seller severs building from land. Reg. 1596(a). DJH 10/30/85

Bill Holden
Assistant Counsel