Ezel / Tax Rulings / CA

Was a jewelry seller's 15-cent handling, postage, and insurance charge taxable when a party hostess delivered the merchandise?

Short answer Yes. The hostess acted as the seller's delivery agent, title passed when California customers received the jewelry, and the added charge remained taxable.
State
CA
Ruling
Annotation 557.0380
Tax type
Sales and Use Tax
Issued
1955-05-02
Issued by
California State Board of Equalization
Requested by
Internal Board review of an out-of-state jewelry seller (identity redacted)
Topics
local delivery handling charges postage insurance title passage
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1955. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1955
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 May 2, 1955 internal correspondence addressed an out-of-state jewelry seller whose salespeople arranged California home parties, took orders, shipped goods to a hostess, and used the hostess to deliver to customers. The seller supplied no documents showing an actual f.o.b.-factory sale. CDTFA says statutory law controls if it conflicts with an annotation. Agency, order acceptance, shipping documents, delivery duties, title timing, charge components, and current law can change the result.
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 jewelry seller's salespeople arranged parties at California homes and took customer orders there. The seller added 15 cents for handling, postage, and insurance, then shipped the merchandise to the hostess for delivery to the customers.

California treated the hostess as the seller's delivery agent. Because the seller provided no documents showing that the sale was actually f.o.b. its factory, title passed only when the hostess delivered the jewelry to the California purchasers.

The 15-cent transportation-and-insurance item was therefore taxable.

Common questions

Was the hostess merely receiving goods for the buyers?

No. The opinion treated her as the seller's delivery agent.

Did the seller prove an f.o.b.-factory sale?

No documentary evidence was submitted.

Was the added handling, postage, and insurance charge taxable?

Yes.

Source

Original ruling text

STATE BOARD OF EQUALIZATION
OFFICE CORRESPONDENCE

557.0380
Place: Sacramento
Date: May 2, 1955

To:

Mr. V. M. Ekstrom

From: John H. Muray
Re:

E--- J---, Inc.
XX --- Street
---, --- ---

Account No. - - XXXX

Now: SC --- XX XXXXXX

In reply to your memorandum of April 22, we advise you that we think item A2,
Transportation and Insurance Charges, is subject to tax.
As we understand it, taxpayer’s salesmen arrange for a jewelry party at the home of a
hostess. Orders are taken there and 15¢ is added as a charge for handling, postage and insurance.
The merchandise is then shipped to the hostess who delivers it to the customers.
Taxpayer has submitted no documentary evidence indicating that the sale is in fact made
F.O.B. factory.
We think that under these circumstances, the hostess is acting as taxpayer’s agent in
making the delivery and thus title passes upon the delivery to the purchasers in California.

JHM:djr

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