Was lumber used for cargo platforms, self-shoring, and blocking aboard seagoing vessels exempt as a watercraft component?

Plain-English summary

A vessel operator used lumber to erect platforms, self-shoring, and blocking on seagoing vessels. The purpose was to increase cargo capacity and keep heavy cargo from shifting.

California concluded that the lumber did not qualify under the watercraft exemption. It compared the installation with dunnage used on freight cars rather than property becoming part of the vessel.

The petitioner also challenged cartage charges in the taxable measure but did not provide requested documentation. Counsel recommended no adjustment and denial of the petition in full.

What this means for you

Cargo contractors, vessel operators, and tax advisers

Temporary lumber serving the needs of a particular cargo load may be treated as taxable dunnage. Preserve invoices and requested support for every separate audit adjustment, including freight or cartage claims.

Common questions

Q: Did the lumber qualify for the watercraft exemption?

A: No.

Q: What function did the lumber serve?

A: It created platforms, self-shoring, and blocking to increase cargo capacity and prevent shifting.

Q: Was the cartage adjustment allowed?

A: No adjustment was recommended because the requested documentation was not supplied.

Citations and references

• California watercraft exemption, as described in the source

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 600.0580
• Original supporting opinion: 600.0580 PDF

Original ruling text

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600.0580

February 5,1957

re:
Dear Mr.

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This is to advise you that we have given careful considera­ tion to the data whirh was .~eveloped at the meeting attended by you, Mr. '.. .,,.., _ ___ . 3 Mr. !. __. r and the representatives of this Board, Mr. Roberti and Mr. Swanson. It is our opinion that the sales of lumber used by the
_
., in the erection of platforms, self-shorings and blockings on seagoing vessels for the purpose of in­ creasing cargo capacity and prevention of shifting of heavy cargo are not sales of property exempted from the sales tax by the watercraft exemption. We feel that you have been correctly advised that this installation of lumber is com­ parable to that of the installation of dunnage on freight cars.

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Since we have received no reply to our letter of October 19 in which we requested documentary verification of petition­ er's claim that the measure of tax improperly included cartage charges, we can only recommend that no adjustment be made because of this item. We shall, therefore, recommend to the Board that the peti­ tion be denied in its entirety and that the unpaid amount is due. You will receive notice of the Board's official action in due course. Very truly yours,

Bill Holden
Associate Tax Counsel
JJD:rc
cc:

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San Francisco - Aud.