Ezel / Tax Rulings / CA

Was a $2 service-station coupon booklet a taxable sale of printed property or a nontaxable sale of service rights?

Short answer It was a nontaxable sale of intangible rights to receive the listed services. The program operator instead owed tax to the printer on the cost of producing the coupon booklets.
State
CA
Ruling
Annotation 540.0180
Tax type
Sales and Use Tax
Issued
1956-10-22
Issued by
California State Board of Equalization
Requested by
A representative of a gasoline-service-station coupon program (identity redacted)
Topics
intangible property printing costs gasoline service stations
Source
View Original PDF

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This page answers the general question as of 1956. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1956
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 Associate Tax Counsel letter dated October 22, 1956, published by CDTFA as support for a sales and use tax annotation. It addresses $2 coupon booklets whose coupons entitled purchasers to specified gasoline-station services at no additional charge, and it treats the operator as the consumer of the printed booklets. Another taxpayer should not treat this historical staff opinion as binding and should check current coupon, service-right, printing, sales-tax, 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 gasoline-service-station program planned to sell coupon booklets to the public for $2 each. Each coupon entitled its holder to a listed service at no additional charge, such as a free lubrication.

The letter treated the customer as buying an intangible right to receive services, not the paper booklet itself. The operator therefore did not owe sales tax on its $2 booklet sales to the public.

The printed booklets were still taxable at the earlier stage: the operator was the consumer of them and had to pay sales tax to the printer on the printing charge.

Citations and references

  • The source letter cites no statute, regulation, or case by number.

Source

Original ruling text

540.0180

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
October 22, 1956

Dear Mr. ______,
Your letter of August 15, 1955, was mislaid among some other papers and only now discovered. We greatly regret any inconvenience this might have caused you. Your letter asked for our opinion concerning the application of sales tax to the sale of gasoline service station coupon booklets to the public for $2.00 each. The booklets contain coupons which entitle the purchaser to various gasoline station services at no charge. For example, a free lubrication. It is our opinion that the sale of the booklets to the general public at $2.00 each would not be regarded as a sale of tangible personal property. Rather, it would be regarded as a sale of an intangible, namely the right to receive the various services listed in the coupon. Accordingly, your client should pay sales tax to the printer on the cost of printing the coupon booklets, but no sales tax would be due upon your client’s sales of the booklets to the public. Very truly yours,

Bill Holden
Associate Tax Counsel

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