Were scrap tires or shredded scrap tires exempt when an industrial facility burned them instead of oil, natural gas, or coal?
Apply this to your situation
This page answers the general question as of 1984. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
An inquirer asked whether shredded automobile and truck tires used as fuel qualified under section 6358.1.
California treated scrap tires and shredded scrap tires as waste by-products from municipal refuse because they were part of the municipal waste stream.
Their sale or use was exempt when an industrial facility burned them instead of oil, natural gas, or coal. The letter noted that, beginning January 1, 1984, the statute no longer required bulk delivery.
What this means for you
Tire processors, industrial plants, and tax advisers
Document the tires' scrap status, their path through the waste stream, the industrial purchaser, and the conventional fuel they replace.
Common questions
Q: Were shredded scrap tires waste by-products?
A: Yes.
Q: What use qualified?
A: Industrial fuel use in place of oil, natural gas, or coal.
Q: Was bulk delivery still required in 1984?
A: No. The letter says that requirement had been deleted.
Citations and references
- California Revenue and Taxation Code § 6358.1
- Chapter 1059, Statutes of 1983, as cited in the source
Source
- Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
- Annotation page: Annotation 596.0700
- Original supporting opinion: 596.0700 PDF
Original ruling text
596.0700
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
(916) 445-2641
January 31, 1984
REDACTED TEXT
This is in reply to your letter of November 28. 1983 addressed to Assistant Chief Counsel Gary Jugum which was referred to me for reply. You request our opinion on whether or not the sale or use of shredded automobile and truck tires used as a fuel is exempt from sales or use tax pursuant to Revenue and Taxation Code Section 6358.1 which, in subdivision (b), provides an exemption for the sale or use of: “Waste by-products from agricultural or forest products operations, municipal refuse, or manufacturing, which are used in an industrial facility as a fuel source in lieu of the use of either oil, natural gas, or coal.” Because tires are a part of the municipal waste stream, you believe that industrial firms using such tires as a fuel in lieu of oil, natural gas, or coal should be exempt from the sales tax. This would provide additional incentive to firms that are presently considering making the necessary plant modifications to accommodate shredded tires and would be consistent with the legislative intent of promoting the use of alternative fuels. In our opinion, scrapped tires or scrapped shredded tires are “waste by-products from…municipal refuse…” within the intent of Section 6358.1. Therefore, the sale or use of scrapped tires or scrapped shredded tires used in an industrial facility as a fuel source in lieu of the use of either oil, natural gas, or coal is exempt from sales or use tax. We note that, prior to January 1, 1984, Section 6358.1 required that the waste by-products be “delivered in bulk.” This further requirement for exemption was deleted by Chapter 1059, Statutes of 1983. If you have further questions, feel free to write me. Very truly yours,
Donald J. Hennessy
Tax Counsel
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