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Business Taxes Law Guide—Revision 2024

Sales And Use Tax Regulations

Title 18. Public Revenues
Division 2. California Department of Tax and Fee Administration — Business Taxes (State Board of Equalization — Business Taxes — See Chapters 6 and 9.9)
Chapter 4. Sales and Use Tax

Article 5. Installers, Repairers, Reconditioners


Regulation 1546. Installing, Repairing, Reconditioning in General.

Reference: Sections 6006, 6010, 6011, 6012, and 6015, Revenue and Taxation Code.

Tire Retreading and Recapping, see Regulation 1548.

Accommodation loans by repairers, see Regulation 1669.

Returns, Defects, and Replacements, see Regulation 1655.

(a) Installation Generally. Charges for labor or services used in installing or applying the property sold are excluded from the measure of the tax. Such labor and services do not include the fabrication of property in place.

(b) Repairmen.

(1) When Retailers. If the retail value of the parts and materials furnished in connection with repair work is more than 10 percent of the total charge, or if the repairman makes a separate charge for such property, the repairman is the retailer and tax applies to the fair retail selling price of the property.*


* Parts furnished for repairing such property as motor vehicles, airplanes, bicycles, machinery, refrigerators, farm implements, musical instruments, radios, television sets, boats and furniture.


If the retail value of the property is more than 10 percent of the total charge, the repairman must segregate on the invoices to his customers and in his records the fair retail selling price of the parts and materials from the charges for labor of repair, installation, or other services performed.** "Total charge" means the aggregate of the retail value of the parts and materials furnished or consumed in making the repairs, charges for installation, and charges for labor of repair or other services performed in making the repairs, including charges for in-plant or on-location handling, disassembly and reassembly. It does not include pick-up or delivery charges.

If the retailer does not make a segregation, the retail selling price of the parts and materials will be determined by the board based on information available to it.

(2) When Consumers. If the retail value of the parts and materials furnished in connection with the repair work is 10 percent or less of the total charge, as defined in (b)(1) above, and if no separate charge is made for such property, the repairman is the consumer of the property,*** and tax applies to the sale of the property to him.


** Section 9884.8 of the Business and Professions Code provides in part, with respect to automotive repair dealers, that "… Service work and parts shall be listed separately on the invoice, which shall also state separately the subtotal prices for service work and for parts, not including sales tax, and shall state separately the sales tax, if any, applicable to each. …"

*** Parts furnished for repairing such property as tires (retreading and recapping, see Regulation 1548), tubes, clothing, fi shing rods, watches, and jewelery (See Regulation 1553)."


(3) Lump-Sum Maintenance Contracts.

(A) In General—Definitions. "Mandatory maintenance contract". A maintenance contract is mandatory within the meaning of this regulation when the buyer, as a condition of the sale, is required to purchase the maintenance contract from the seller. "Optional maintenance contract". A maintenance contract is optional within the meaning of this regulation when the buyer is not required to purchase the maintenance contract from the seller, i.e., he is free to contract with anyone he chooses.

(B) Mandatory Maintenance Contracts. If the repair work is performed under a mandatory lump-sum maintenance contract providing for the furnishing of parts, materials, and labor necessary to maintain the property, the repairer is regarded as the retailer of the material furnished. Accordingly, if the property upon which the maintenance will be performed is sold at retail, the measure of tax includes any amount charged for the lump-sum maintenance contract, whether or not separately stated. The sale of the parts and materials to the repairer furnishing them under such a contract is a sale for resale and is not taxable.

(C) Optional Maintenance Contracts. If the repair work is performed under an optional lump-sum maintenance contract providing for the furnishing of parts, materials, and labor necessary to maintain the property, the repairer is regarded as the consumer of the parts and materials furnished.

(4) Exchange of Used for Reconditioned Similar Property. If the method of repairing or reconditioning certain tangible personal property involves commingling property delivered to a repairman or reconditioner with similar property so that the customer receives repaired or reconditioned property which may not be the identical property delivered to the repairman or reconditioner but which is exactly the same kind of property or derived from exactly the same kind of property as that so delivered, tax applies to the amount charged by the repairman or reconditioner for the repaired or reconditioned property.

(5) Repair Jobs Covered by Insurance. An amount represented as the sales price of parts in an accepted bid is the taxable measure required to be reported by the repairman unless there is a subsequent modification of the bid agreement and the customer or the insurer is informed of the change, provided, however, that the sales price of the parts is not less than the cost of the parts actually used. The bid agreement may be modified by an invoice or a priced repair order given to the customer or the insurer showing the sales price of the property actually furnished by the repairman. If a bid is so modified and the customer or insurer is notified of the change, the amount represented as the sales price of the parts on the modified bid is the amount upon which tax must be reported.

When the accepted bid is in writing, the subsequent modification to the bid agreement must also be in writing. The customer or the insurer should be notified of such modification prior to completion of the sale (e.g., delivery of the repaired automobile).

History—Effective August 1, 1933.

Adopted as of January 1, 1945, as a restatement of previous rulings.

Amended and renumbered November 3, 1969, effective December 5, 1969.

Amended November 5, 1970, effective December 10, 1970.

Amended September 18, 1973, effective October 27, 1973.

Amended May 21, 1975, effective June 29, 1975. Defined "total charge" and related the percentage test of whether a repairman is a retailer or consumer to that term.

Amended October 22, 1975, effective November 29, 1975. Required separation of material and labor where material is more than 10 percent of repair bill.

Amended December 7, 1978, effective February 18, 1979. Amends subsection (b)(1) to delete language on excess tax reimbursement.


Regulation 1547 Vehicle Engine Exchanges

(Repealed December 1, 1984, effective June 8, 1984.)


Regulation 1548. Retreading and Recapping Tires.

Reference: Section 6006, Revenue and Taxation Code.

(a) Retreading and Recapping Customer's Own Tires. Tire retreaders and recappers are the retailers of the tangible personal property furnished to consumers and tax applies to sales of such property. If a lump-sum charge is made for retreading or recapping, 75 percent thereof is considered to be the sales price of the property.

(b) Sales of Retreaded or Recapped Tires Generally. Tax applies to sales of retreaded or recapped tires, the sales price of which includes any amount allowed for the customer's old tires or other merchandise traded in (see Regulation 1654, Barter, Exchange, Trade-ins). If the method of retreading or recapping tires involves the commingling of old tires delivered to the retreader or recapper with similar property so that the customer receives retreaded or recapped tires which may not be the identical tires delivered to the retreader or recapper, but which are similar to those delivered, the tax applies to the amount charged by the retreader or recapper for the tires.

History—Effective August 1, 1933.

Adopted as of January 1, 1945, as a restatement of previous ruling.

Amended and renumbered October 29, 1971, effective December 3, 1971.


Regulation 1549. Fur Repairers, Alterers and Remodelers.

Reference: Sections 6006 and 6015, Revenue and Taxation Code.

(a) In General. Repairers, alterers and remodelers of furs are retailers of the fur sold in connection with repairing, altering and remodeling of fur garments.

Fur repairers, alterers, and remodelers must segregate on the invoices presented to their customers and in their records the fair retail selling price of the fur furnished by them, from the charges for the labor of repairing, altering, or remodeling the fur garment. If the retailer does not make a segregation of these charges, the retail selling price of the fur will be determined by the Board based on information available to it.

The repairers, alterers and remodelers are the consumers of the thread, buttons, lining and materials other than fur used in connection with such repairing, altering and remodeling unless a separate charge for such property is made on the invoices to the customers at the fair retail selling price, in which case they are the retailers of the property.

(b) Fabrication Labor. Where the services performed on the fur garment by repairers, alterers, or remodelers result in producing, processing, or fabricating tangible personal property or are a step in producing, processing, or fabricating tangible personal property, the entire charge, including fabrication labor and materials, is subject to tax.

(c) Examples of the Application of Tax Under Specific Circumstances. Listed below are 12 situations involving the measure of taxability on repairing or remodeling fur garments. The answer "Repair" indicates that the tax applies to the retail selling price of materials furnished by the furrier. The answer "Taxable" indicates that the total charge is subject to tax.

(1) A customer brings in a fur coat and requests that it be restyled as a coat.—Repair.

(2) A customer brings in a coat and requests that it be remodeled into a jacket.—Repair.

(3) A customer brings in a coat and requests that it be made into a cape.—Taxable.

(4) A customer brings in a coat and requests that it be made into a stole.—Taxable.

(5) A customer brings in a jacket and requests that it be remodeled into a cape.—Taxable.

(6) A customer brings in a jacket and requests that it be remodeled into a stole.—Taxable.

(7) A customer brings in a cape and requests that it be remodeled into a stole.—Repair.

(8) A customer brings in a stole and requests that it be remodeled into a cape.—Repair.

(9) A customer brings in a coat and requests that it be remodeled, and it is necessary to use additional fur to add collar and cuffs which have not heretofore existed on the coat.—Repair.

(10) A customer comes in and requests that a garment be relined.—Repair.

(11) A customer comes in with an animal scarf and requests that the scarf be restyled into a new style animal scarf.—Repair.

(12) A customer brings in an animal scarf and requests that it be remodeled into a stole or cape.—Taxable.

History—Effective August 1, 1933.

Adopted as of January 1, 1945, as a restatement of previous rulings.

Amended by renumbering August 5, 1969, effective September 6, 1969.

Amended September 28, 1977, effective November 25, 1977. Required separation of material and labor on bill. Clarified fabrication labor.

Amended December 7, 1978, effective February 18, 1979. Deletes language on excess tax reimbursement from Section (a).


Regulation 1550. Reupholsterers.

Reference: Sections 6006, 6012, and 6015, Revenue and Taxation Code.

(a) General. This regulation applies to reupholsterers in general, including, but not limited to, reupholsterers of household furniture, automobiles, boats, and airplanes. Effective January 1, 1975, the term "reupholsterers" as used in this regulation includes box spring and mattress renovators.

Reupholsterers generally perform four functions when completing a contract for their services.

(1) The sale of material and parts.

(2) The fabrication of back and seat cushions and the cutting and sewing of new material used for upholstery covering.

(3) Labor for stripping old materials and applying new material to tangible personal property.

(4) Repair labor such as retying springs and refinishing the exposed wooden areas of furniture, i.e., arms, legs, etc.

(b) Sales of Materials and Parts. Reupholsterers are the retailers of materials and parts they sell in connection with reupholstering jobs. These include but are not limited to: fabrics for furniture covering, cushions, foam rubber, padding, burlap, dust covers, seat decking, spring units, legs, arms and casters.

Reupholsterers also are the retailers of items with small unit values or furnished in small quantities on any particular job. These are commonly referred to as findings and include such items as brads, buttons, cardboard strips, edge roll, edge wire, glue, spring clips, tacks, tacking strips, thread, twine, web cord and varnish. If charges for the findings are not segregated, the tax on such findings may be computed and reported in the manner specified in paragraph (e) below.

(c) Fabrication Labor. Charges for fabrication labor are taxable. Cutting and sewing materials for coverings for furniture being reupholstered, including back and seat cushions, are steps in the process of completing a new article and are fabrication labor. Labor for making new furniture from material furnished directly or indirectly by the customer is fabrication labor.

(d) Exempt Labor. Labor charges for repairing furniture and for applying new materials to furniture are exempt providing such charges are segregated in reupholsterers' records from charges for materials and fabrication labor.

(e) Computation of Exempt Labor. Reupholsterers are required to segregate material charges (other than charges for findings) from labor charges in their records. If no segregation is made between taxable fabrication labor and exempt installation or repair labor, it will be considered that 80 percent of total labor charges represent exempt labor. The remaining 20 percent of total labor charges will be regarded as the measure of taxable fabrication labor and findings.

(f) Method of Reporting. Reupholsterers who segregate in their records the sales price of materials, charges for fabrication labor, and charges for exempt labor may report their taxable sales by reporting total sales less a deduction for exempt labor.

If fabrication labor and sales of findings are not segregated in the reupholsterers' records, the allowable deduction for exempt labor will be an amount equal to 80 percent of the total labor charges.

A combination of the two reporting methods cannot be used for the same reporting period.

History—Adopted November 3, 1969, effective December 5, 1969.

Amended October 17, 1973, effective November 18, 1973.

Amended November 13, 1974, effective December 15, 1974. Included box spring and mattress renovators as reupholsterers.

Amended December 7, 1878, effective February 18, 1979. Deletes subsection (f) which pertained to Billings of Customers and which required that amounts represented to customers on sales tax reimbursement must be separately stated on the sales invoice. Renumber former subsection (g) to (f).


Regulation 1551. Repainting and Refinishing.

Reference: Section 6006, Revenue and Taxation Code.

Painters, Polishers and Finishers, see Regulation 1524.

Resale Certificates, see Regulation 1668.

(a) Repainting and Refinishing for Consumers. Tax does not apply to single or lump-sum charges for repainting or refinishing used articles. Tax applies in such case to the sale to the refinisher of the paint and other materials used in the process, as he is regarded as the consumer of such property. If the refinisher uses paint or other materials purchased under a resale certificate, or without payment of use tax if purchased outside the State or in interstate commerce, he must report and pay tax measured by the cost of the materials to him.

If, however, the refinisher makes a separate charge at the fair retail selling price for the paint or similar finishing material that is applied to and becomes a component part of the used articles, he is the retailer of such paint or finishing material and tax applies to the amount of the separate charge.

(b) Repainting and Refinishing for Sellers. A refinisher of used articles for sellers who will resell the articles in the regular course of their businesses will be regarded as selling for resale the paint or similar finishing material that becomes a component part of the used articles. The refinisher should take a resale certificate under these circumstances.

History—Effective August 1, 1933.

Adopted as of January 1, 1945, as a restatement of previous ruling.

Amended by renumbering August 5, 1969, effective September 6, 1969.

Amended February 5, 1975, effective March 13, 1975. Provided for charge of tax where materials used are separately stated for consumers and, as to resellers, that a resale certificate should be furnished.


Regulation 1553. Miscellaneous Repair Operations.

Reference: Section 6006, Revenue and Taxation Code.

(a) Bookbinders. Bookbinders are consumers, rather than retailers, of the materials, such as cloth, leather, cardboard, glue, and thread, used in rebinding used book for a single or lump-sum charge, and tax applies to the sale of such materials to the bookbinder. If, however, the bookbinder makes a separate charge for such property at the fair retail selling price, the bookbinder is the retailer of the materials and tax applies to the amount of the separate charge.

When bound books are sold at retail, tax applies to the gross receipts without any deduction for the cost of binding, even when done by the seller of the books. Tax also applies to the entire charge for the initial binding of new books furnished to a bookbinder for binding, unless the customer of the bookbinder will sell the books in the regular course of business, in which case the customer of the bookbinder may furnish a resale certificate to the bookbinder.

Tax applies to the entire charge for binding done in connection with the furnishing of a finished product, i.e., a bound book, including a book produced with either a hard or soft cover by binding together materials such as magazines, newspapers, or business records.

(b) Motor and Transformer Rewinding. Tax applies to sales of materials and supplies furnished in connection with the rewinding of motors and transformers. If a lump-sum price is charged for the materials and labor, 50 percent thereof is regarded as the sales price of the supplies and materials.

(c) Shoe Repairpersons. Persons engaged in repairing shoes are retailers of the tangible personal property furnished in connection with the repair work and tax applies to the retail selling price of such property. If a lump-sum or single charge is made for both materials and labor, 25 percent thereof is considered the retail selling price of the materials.

Tax applies to retail sales by shoe repairpersons of such items as shoes, polishes, and laces.

(d) Tennis Racket Restringing and Repairing. Persons engaged in repairing and restringing tennis rackets are retailers of the strings and other tangible personal property furnished, and tax applies to the retail selling price thereof. If a lump-sum charge is made for materials and labor, 50 percent thereof is regarded as the retail selling price of the materials furnished.

(e) Watch and Jewelry Repair Persons. Persons engaged in repairing watches and jewelry are consumers of watch, clock and jewelry repair parts and material such as crystals, findings, chain links, gold and gems used in repairing watches, clocks and jewelry. Tax applies with respect to the sale to them of such property unless

(1) The retail value of the parts and materials furnished in connection with repair work is more than 10 percent of the total charge, or

(2) The repair person makes a separate charge for the repair parts and materials.

Repairers are, however, retailers of wrist watch straps, metal bands, watches, clocks, chains, precious stones, gems and other tangible personal property which they sell to consumers in the regular course of business, and tax applies to the gross receipts from such retail sales.

When the retail value of wrist watch straps, metal bands, watches, clocks, chains, precious stones, gems and other tangible personal property furnished in connection with a repair work is more than 10 percent of the total charge for the repair, the repair person is the retailer of these parts and materials, and must segregate on the invoices to customers and in its records the fair retail selling price of these parts and materials from the charges for the repair labor performed. "Total charge" means the aggregate of the retail value of the parts and materials furnished or consumed in making the repairs and charges for the labor performed in making the repairs.

History—Effective August 1, 1933.

Adopted August 5, 1969, as a restatement of former rulings 32 (Cal. Admin. Code 1952); 33 (Cal. Admin. Code 1953); 34 (Cal. Admin. Code 1954); 35 (Cal. Admin. Code 1955), effective September 6, 1969.

Amended November 3, 1969, to include former Ruling 27 (Cal. Admin. Code 1947), effective December 5, 1969.

Amended January 8, 1975, effective February 16, 1975. Included bound magazines, newspapers, and business records as finished products.

Amended March 26, 2003, effective June 26, 2003. Subdivision (a)—word "he" replaced with "the bookbinder"; word "he" in first unnumbered paragraph replaced with "the customer of the bookbinder". Subdivision (c)—word "Repairman" in title replaced with "Repairpersons". Words "Shoe repairmen" replaced with "Persons engaged in repairing shoes"; word "repairmen" in first unnumbered paragraph changed to "repairpersons". Subdivision (e)—word "Repairmen" in title replaced with "Repair Persons." Phrase "Persons engaged in repairing" added; word "Watch" changed to small case and made plural; word "and" before words "chain links" deleted and words "gold and gems" added afterward; word "unless" added to last sentence; new paragraphs (1) and (2) added; word "They" in first unnumbered paragraph changed to "Repairers"; words "precious stones, gems" added after "chains"; new second unnumbered paragraph added.