Were sectional paint-spray booths and a built-in five-ton floor scale machinery and equipment under a federal cost-type contract?

Plain-English summary

The first item was a paint-spray booth assembled in sections and bolted to the floor. A track ran through it, and large sheet-metal flues connected the booth through the building wall. Because it could not be removed or dismantled as a unit and adapted the structure for specialized painting, the letter treated it as a fixture rather than machinery and equipment.

The second item was a five-ton built-in dial floor scale. The Board's prior administrative practice treated that kind of scale as material or a fixture, not machinery and equipment.

Sales tax therefore applied to the parts and materials sold to the contractor. If the contractor bought fabricated booth parts or the complete scale, section 6384 applied to that sale as well.

Common questions

Why was the paint booth a fixture?

It was bolted down, installed in sections, connected through the wall, and not removable as a unit.

Was the built-in scale machinery and equipment?

No. The letter classified it as material or a fixture.

What purchases were taxable?

The parts, materials, fabricated parts, or complete scale sold to the contractor.

Citations and references

• Cal. Rev. & Tax. Code section 6384 — taxable sale of the property to the federal contractor
• Historical Sales and Use Tax Ruling 12 — fixture and machinery-and-equipment conditions applied

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/565-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/565-0400.pdf

Original ruling text

565.0400

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
April 24, 1953
Attention:

______
Chief
Legal Division

Gentlemen:
This refers to your inquiry of March 23 concerning the application of the sales tax with respect to two items of equipment acquired under subject cost-type contract. We requested our San Jose District Office to give us a report concerning these items so that we would be in a better position to arrive at an opinion. The first item, paint spray boots, appears from your letter and the report of our San Jose District Office to constitute “fixtures” rather than “machinery and equipment” under Ruling 12. The description indicates that they are bolted to the floors, installed in sections, and could not be removed or dismantled as a unit. A track runs through the booths and sheet metal flues four to five feet in diameter are connected to the booths and run from the booths through the wall to the outside of the building. They appear themselves to constitute improvements and, rather than being considered as machinery or equipment, they appear to us to constitute an adaptation of the structure itself for the specific purpose of a special type of painting. Thus, in our opinion conditions No. 2 and 3 in Ruling 12 are not complied with. The other item is a five ton Toledo built-in dial floor scale. Reference to our records of previous rulings indicates that we have consistently regarded such built-in floor scales as materials and fixtures rather than machinery and equipment under Ruling 12. It is, therefore, our opinion that the sales tax applies with respect to the sale to the contractor of the parts and materials entering into the paint spray booths and scales, or if the contractor purchases fabricated parts, or, in the case of a scale, the entire scale, then the tax applies under Section 6384 of the Revenue and Taxation Code with respect to the sale of the property to the contractor. Very truly yours,

E. H. Stetson
Tax Counsel
EHS:ph
cc:

San Jose – Auditing (RGS)