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BTLG Table of Contents > Sales and Use Tax Annotations > C > 195.0000 Containers and Labels > Annotation 195.1521

Sales and Use Tax Annotations

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C

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195.0000 Containers and Labels—Regulation 1589

Annotation 195.1521

(b) Returnable Containers

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195.1521 Gas Cylinders and Storage Vessels. Taxpayer purchases empty cylinders, fills them with gas and sells the contents to consumers and makes a "rental charge" in the form of a monthly fee for each cylinder delivered. Although the sale of the contents may be taxable, the charge for the cylinder is exempted by Regulation 1589(b)(1)(B) as a returnable container. The initial purchase of the empty cylinders, however, is subject to sales tax if purchased in California. If the cylinders are purchased outside this state for use in this state, the purchase of the cylinder is subject to use tax. The periodic fee charged to the customers is not subject to tax.

For customers buying larger quantities of gas, the taxpayer delivers and installs large storage vessels at the customer's location. The customer pays a periodic rent for the vessels. As the vessels are delivered empty, they do not qualify as containers under Regulation 1589(b)(1)(B). The imposition of the tax on the acquisition/rental of the vessels is governed by Regulation 1660. 8/16/90.