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Note: Authority: Section 7051, Revenue and Taxation Code. Reference: Sections 6006, 6015, 6094, 6244, 6362, 6379.5 and 6396, Revenue and Taxation Code.







(Also See Article 24)


s 1546. Installing, Repairing, Reconditioning in General.
(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 such property. [FN1]
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. [FN2] "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, [FN3] and tax applies to the sale of the property to him.
(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 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 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 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).
[FN1] Parts furnished for repairing such property as motor vehicles, airplanes, bicycles, machinery, refrigerators, farm implements, musical instruments, radios, television sets, boats and furniture.
[FN2] 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 . . ."
[FN3] Parts furnished for repairing such property as tires (retreading and recapping, see regulation 1548), tubes, clothing, fishing rods, watches, and jewelry (see regulation 1553).


Note: Authority cited: 7051, Revenue and Taxation Code. References: Sections 6006, 6010, 6011, 6012, and 6015, Revenue and Taxation Code. Tire Retreading and Recapping, see regulation 1548. Accommodation loaned by repairers, see regulation 1669. Returns, Defects, and Replacements, see regulation 1655.


s 1547. Vehicle Engine Exchanges.


Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6006 and 6012, Revenue and Taxation Code.


s 1548. Retreading and Recapping Tires.
(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.


Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Section 6006, Revenue and Taxation Code.


s 1549. Fur Repairers, Alterers and Remodelers.
(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 or 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.


Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6006, 6015, Revenue and Taxation Code. Fur dressers and dyers, see Regulation 1525 and Regulation 1928-Unrevised Series.


s 1550. Reupholsterers.
(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 the 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 sale 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.


Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6006, 6012, and 6015, Revenue and Taxation Code. Fabrication Generally, see regulation 1526.


s 1551. Repainting and Refinishing.
(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.


Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Section 6006, Revenue and Taxation Code. Neon sign relettering, see Regulation 1552. Painters, polishers and finishers, see Regulation 1931 Unrevised Series. Resale certificates, see Regulation 1688 (2668 Unrevised Series).


s 1553. Miscellaneous Repair Operations.
(a) Bookbinders.Bookbinders are consumers, rather than retailers, of the materials, such as cloth, leather, cardboard, glue, and thread, used in rebinding used books 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 Repairperson. 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 materials 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.


Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Section 6006, Revenue and Taxation Code.Authority cited: Section 7051, Revenue and Taxation Code. Reference: Section 6006, Revenue and Taxation Code.


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1565. Auctioneers.
Persons engaged in the business of making retail sales at auction of tangible personal property owned by such person or others are retailers, and are, therefore, required to hold sellers' permits and pay tax measured by the gross receipts from such sales.
The amount upon which tax is computed includes he amount charged for merchandise returned by a customer at an auction sale, if the sale is made under an agreement or understanding at the time of sale that the property will not be delivered or that any amount paid will be returned to the bidder.
Sales tax does not apply, however, when an owner of property delivers it to an auctioneer for auction and bids in his own property at the auction.
(Also See Article 25)

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6006.6, 6015, Revenue and Taxation Code.


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1566. Automobile Dealers and Sales Representatives.
(a) Dealer Aid to Sales Representatives.An automobile dealer, pursuant to section 6015, is regarded as the retailer of tangible personal property sold by the dealer's sales representatives in their own behalf if the dealer aids the sales representatives in making such sales in either of the following ways:
(1) By reporting the sales representatives' sales on the dealer's report of sales to the Department of Motor Vehicles.
(2) By executing conditional sales agreements with respect to such sales representatives' sales in which the dealer appears as the seller.
Dealers who aid their sales representatives by acting as guarantors on conditional sales agreements executed by the sales representatives or by requiring or permitting the sales representatives to use the dealer's showroom or other facilities in making such sales are not required to pay tax on the sale of the vehicles. The purchasers from these sales representatives, and from sales representatives making sales without dealer aid, must pay the use tax to the Department of Motor Vehicles.
(b) Resale Certificates from Nondealer Retailers. A dealer who is licensed or certificated pursuant to the California Vehicle Code and who sells a vehicle to a retailer who is not regularly engaged in selling or leasing vehicles should accept a resale certificate only if it contains a statement that the specific vehicle is being purchased for resale in the regular course of business.
Unless the person named as the purchaser on the resale certificate is also named on the dealer's report of sale and application for registration, either singly or jointly as registered owner, the sale will be regarded as a retail sale subject to sales tax, and the resale certificate will not be honored, whether or not it contains a statement that the specific vehicle is being purchased for resale in the regular course of business.
(c) Sales to Members of the Armed Services.A dealer (or manufacturer or dismantler) who is licensed or certificated pursuant to the California Vehicle Code must report and pay sales tax to the Board with respect to the sale of a vehicle in California to a member of the armed services regardless of the service member's place of residence. A dealer (or manufacturer or dismantler) so licensed or certificated who sells a vehicle outside of California to a member of the armed services for use in California must collect use tax from the service member and remit it to the Board unless the sale is made to a service member on active duty, prior to the effective date of his discharge and his intention to use the vehicle in California results from official transfer orders to California and not from the service member's own independent determination. The service member will be considered to have made an independent determination to use the vehicle in California if the contract to purchase the vehicle is made after the service member receives official transfer orders to California or if at the time the contract to purchase the vehicle is made the service member arranges to take receipt of the vehicle in California.
(d)Out-of-State Purchases of Vehicles.
Regarding the applicability of tax to the out-of-state purchase of a vehicle, see subdivision (b) of Regulations 1620 (18 CCR 1620).
(Also See Article 25)

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6015, 6092-6242, 6248, 6249, 6422.1 and Chapter 3.5 (commencing with Section 6271), Revenue and Taxation Code.


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1567. Banks and Insurance Companies.
(a) Banks.
(1) Sales by Banks. Sales tax applies to the sale by banks, other than federally-chartered banks exempt from direct state taxation under federal law such as federal reserve banks and federal home loan banks, of tangible personal property sold at retail in this state. [FN1] Use tax applies to the storage, use, or other consumption in this state of tangible personal property purchased at retail from a bank for storage, use, or other consumption in this state, the sale of which is exempt from sales tax. Banks, whether or not exempt from direct state taxation, which are engaged in business in this state and making sales of tangible personal property the storage, use, or other consumption of which is subject to use tax, must collect the tax from the purchaser and pay the amount of tax to the board.
(2) Sales to Banks. Sales tax applies to the sale to banks, other than federally-chartered banks exempt from direct state taxation under federal law, of tangible personal property sold at retail in this state. Banks, other than federally-chartered banks exempt from direct state taxation under federal law, are required to pay use tax to the same extent and in the same manner as other persons storing, using, or otherwise consuming tangible personal property in this state. [FN1] Retailers engaged in business in this state and making sales to banks of tangible personal property the storage, use, or other consumption of which is subject to use tax must collect the tax from the purchaser and pay the amount of the tax to the board.
(b) Insurance Companies. Sales tax applies to retail sales in this state to insurance companies. Although sales tax does not apply to sales by insurance companies, they are required to collect use tax from consumers when making sales or leases of tangible personal property, and to pay the amount of the tax to the board to the same extent and in the same manner as other retailers selling or renting tangible personal property for storage, use, or other consumption in this state.
Use tax does not apply to the storage, use or other consumption in this state by insurance companies of tangible personal property.
__________
[FN1] Sales and use taxes imposed upon banks with respect to all income years, as defined in Revenue and Taxation Code Section 23042, beginning on and after January 1, 1980.-
(Also See Article 25)

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6203 and 6352, Revenue and Taxation Code. Mutual Life Insurance Co. v. City of Los Angeles (1990) 50 Cal.3d 402.


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1568. Beer, Wine and Liquor Dealers.
The measure of tax with respect to retail sales of beer, wine and spirituous liquors is the entire amount charged therefor, inclusive of the amount of other state or federal taxes imposed with respect to the property.
(Also See Article 25)

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Section 6012, Revenue and Taxation Code. Federal areas, sales on, see Regulation 1616. Federal taxes generally, see Regulation 1617.


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1569. Consignees and Lienors of Tangible Personal Property for Sale.
A person who has possession of property owned by another, and also the power to cause title to that property to be transferred to a third person without any further action on the part of its owner, and who exercises such power, is a retailer when the party to whom title is transferred is a consumer. Tax applies to his gross receipts from such a sale.
Pawnbrokers, storage men, mechanics, artisans, or others selling the property to enforce a lien thereon, are retailers with respect to sales of the property to consumers and tax applies to the receipts from such sales.
(Also See Article 25)

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Section 6015, Revenue and Taxation Code. Sales by court-appointed officers, see Regulation 1573 (unrevised series 1974).


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1570. Charitable Organizations.
(a) Definition. For purposes of this regulation, the term "charitable organization" means and includes any organization which meets all of the following conditions:
(1) The organization must be formed and operated for charitable purposes and must qualify for the "welfare exemption" from property taxation provided by section 214 of the Revenue and Taxation Code.
(2) The organization must be engaged in the relief of poverty and distress.
(3) The organization's sales or donations must be made principally as a matter of assistance to purchasers or donees in distressed financial condition.
(4) The property sold or donated must have been made, prepared, assembled or manufactured by the organization.
(A) The welfare exemption referred to in condition (1) is available to property owned and operated by a charitable organization under certain conditions. Among them is the requirement that the property be used in the actual operation of a charitable activity. Property used merely to raise funds is not used in a charitable activity even though the funds will be devoted to a charitable purpose. An example of a retail location being engaged in a charitable activity is a store employing handicapped persons as store personnel which devotes its profits to the store operation and an associated closed workshop for the handicapped.
(B) In order to receive the sales tax exemption it is necessary for the organization to receive the welfare exemption on the retail location for which the seller's permit is held. The welfare exemption must be claimed annually by March 15 with the county assessor on forms provided for this purpose. If the organization does not own the store premises, it must receive the welfare exemption on its personal property, i.e., inventory, furnishings, and fixtures.
(C) Conditions (2) and (3) are fulfilled if the primary purpose of the organization is to relieve poverty and distress and to aid purchasers and donees by selling its property at reduced prices or donating its property so as to be of real assistance to the purchasers and donees. Incidental sales to persons other than indigents will not preclude the organization from receiving the benefits of Revenue and Taxation Code Section 6375.
(D) Condition (4) is fulfilled when the property is picked up at various locations and brought together (assembled) at one or more locations for purposes of sale or donation, even though nothing further remains to be done to the property to place it in saleable condition. Property is deemed "prepared" when it is made ready for sale or donation by such processes as cleaning, repairing, or reconditioning.
(b) Sales by Charitable Organizations. Sales by a charitable organization are exempt from the sales tax and the purchaser is exempt from the use tax provided all of the conditions of paragraph (a) above are met.
(c) Sales to Charitable Organizations.
(1) Effective January 1, 1990, neither the sales tax nor the use tax apply to tangible personal property purchased by a charitable organization for the purpose of donation by the organization provided all of the conditions of paragraph (a) above are met. Tax applies, however, to sales to the organization of supplies (such as tools and office supplies) and other articles not otherwise exempt.
(2) Any seller claiming an exemption from the sales tax for property sold to a charitable organization for subsequent donation may obtain from the organization and retain an exemption certificate in accordance with the requirements of section 1667, Title 18, California Code of Regulations (Regulation 1667, "Exemption Certificates").
(d) Seller's Permits Required.
Organizations qualifying for exemption under section 6375 are retailers and are required to hold seller's permits even though all of their sales are exempt from tax.
(e) Medical Health Information Literature. Use tax does not apply to the storage, use, or other consumption in this state of medical health information literature purchased by any organization formed and operated for charitable purposes which qualifies for the exemption provided by section 214, the "welfare exemption," which is engaged in the dissemination of medical health information; provided that such purchases are made from a national office, or another branch of that national office, of the same organization.
(f) Health and Safety Materials. Use tax does not apply to the storage, use, or other consumption in this state of health and safety educational materials and insignia routinely sold in connection with health and safety and first aid classes, purchased or sold by any national organization formed and operated for charitable purposes which qualifies for the exemption provided by section 214, the "welfare exemption," which is engaged in the dissemination of health and safety information; provided that such purchases are made from a national office another branch or chapter of such office of the same organization.
(g) Medical Identification Tags. Tax does not apply to the sale of, or the storage,use, or other consumption of, medical identification tags furnished by an organization exempt from taxes under Revenue and Taxation Code section 23701. The term "medical identification tags" includes any tag worn by a person for the purpose of alerting other persons that the wearer of such tag has a medical disability or allergic reaction to certain treatments.
(Also See Article 25)

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6371, 6375, 6408 and 6409, Revenue and Taxation Code.


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1571. Florists.
Tax applies to amounts charged by a florist to his customers for the delivery of flowers, wreaths, etc., to points within California, even though he instructs another florist to make the delivery, but in such case tax will not apply to amounts received by the florist making the delivery.
Tax applies to amounts charged by florists who receive orders for the delivery of flowers, wreaths, etc., to points outside this state and instruct florists outside this state to make the delivery.
The measure of tax includes charges made for telegrams or telephone calls whether or not the charges are separately stated. A "relay" or other service charge, made in addition to the charge for the telegram or telephone call, must also be included in the measure of tax.
Tax does not apply to amounts received by California florists who make deliveries in this state pursuant to instructions received from florists outside this state.
(Also See Article 25)

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sec. 6012, Rev. and Tax. Code.


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1572. Memorial Dealers.
(a) Memorial Dealers as Retailers. Memorial dealers are retailers of the tombstones, markers, and other memorials sold by them, and the consumers of materials, such as cement, used in setting the memorial in the cemetery. The term memorial dealer includes cemeteries which sell memorials.
(b) Measure of Tax-Cemetery Installations by Memorial Dealers. When the memorial dealer agrees to furnish a memorial and to set it in the cemetery, the dealer must segregate on the invoice presented to his customer, and in his records, the fair retail selling price of the memorial from the charge for setting the memorial in the cemetery. Tax applies to the sale to the customer measured by the fair retail selling price of the memorial, including charges for cutting, shaping, polishing, or lettering the memorial, or for transporting the memorial to the cemetery. Tax does not apply to the charge for the labor of setting the memorial in the cemetery. Tax applies to the sale to or the use by the memorial dealer of the material consumed in the installation of the memorial.
(c) Cemeteries Constructing Foundations. When a cemetery constructs a foundation upon which a memorial dealer places a memorial, the cemetery is the consumer of the materials furnished in the construction of the foundation and tax applies to the sale to or the use by it of the material consumed in constructing the foundation. This is the case, whether a cemetery collects charges for the foundation from the memorial dealer or directly from the customer of the memorial dealer.
(d) Segregation of Charges. If the memorial dealer or cemetery does not segregate the retail selling price of the memorials from the charges for installation of the memorials and the construction of the foundations, a segregation of these charges will be determined by the Board based on information available to it.
(Also See Article 25)

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6006, 6010-6012, Revenue and Taxation Code.


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1573. Court Ordered Sales, Foreclosures and Repossessions.
(a) Sales Ordered by State Courts. Tax applies to the sale of tangible personal property by an officer of the court such as a sheriff, commissioner, assignee for the benefit of creditors, executor or administrator (including a bank), or other officer appointed by a court to make the sales if the officer is a retailer with respect to that sale.
Generally, an officer is a retailer if he makes three or more sales of tangible personal property for substantial amounts, or a substantial number of sales for relatively small amounts, in any period of 12 months in the conduct or liquidation of a single business or estate. Sales of vehicles required to be registered or subject to identification under the Vehicle Code or of vessels or aircraft are not counted in determining the number of sales for this purpose.
An officer is a retailer with respect to every sale of a vehicle required to be registered under the Vehicle Code or subject to identification under Division 16.5 of that code, of a vessel, or of an aircraft. This is true whether or not the officer makes a series of sales of other tangible personal property from the same business or estate. The purchaser of such a vehicle, vessel or aircraft is generally required to pay use tax.
(b) Foreclosure Sales. Tax does not apply to sales of tangible personal property at public auction pursuant to the provisions of a security agreement if the property is purchased by the secured party who sold the property to the debtor. Tax applies to other foreclosure sales and to other sales by the secured party or the debtor to the same extent as it applies to sales generally.
(c) Repossessions. Tax does not apply to a repossession of tangible personal property by a seller from a purchaser who has not completed his payments provided the purchaser does not receive an amount from the seller, including the cancellation of the unpaid balance, that is greater than his purchase price.
(Also See Article 25)

Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6006, 6015 and 6019, Revenue and Taxation Code.


ARTICLE 6. SPECIFIC BUSINESS ENGAGED IN RETAILING

s 1574. Vending Machine Operators.
(a) General.
(1) Permits. Persons operating vending machines dispensing tangible personal property of a kind the gross receipts from the retail sale of which are subject to tax or dispensing food products at retail for more than 15 cents must obtain permits to engage in the business of selling tangible personal property. One permit is sufficient for all machines of one operator.
A statement in substantially the following form must be affixed upon each vending machine in a conspicuous place:
"This vending machine is operated by _________________________
________________________________________________________________
Name of Operator
________________________________________________________________
Address of Operator
who holds Permit No. __________________________________________ issued pursuantto the Sales and Use Tax Law.'
(2) Records. Adequate and complete records must be kept by the operator showing the location or locations of each machine operated by him or her, the serial number thereof, purchases and inventories of merchandise bought for sale through all such machines, the prices charged by the operator, the gross receipts derived from the operation at each location, the receipts from exempt sales, and where applicable, the sales price to consumer, see subdivision (b). Records must be kept of the receipts derived from each machine at the location if differing kinds of merchandise are vended through separate machines at that location.
(3) Schedule Showing Allocation by County. If the machines are operated in more than one county, a schedule must be attached to the return showing the tax allocable to each county. If a person purchases property under a resale certificate and dispenses it through a vending machine under circumstances where the person is considered to be the consumer of the property, see subdivision (b), a schedule must be attached to the return showing the use tax due thereon allocable to each county.
(4) Sales to Operators Not Furnishing Resale Certificates. Persons making sales of tangible personal property of a kind the gross receipts from the retail sale of which are taxable, to operators of vending machines to be resold through such machines, must notify this board of the name and address of each operator who fails to furnish a valid resale certificate. In the event such persons fail to so notify the board, or desire to assume tax liability for the operations of particular vending machines, then, pursuant to Revenue and Taxation Code Section 6015, they are required to return the tax to the state, measured by the receipts from the retail sale of the property.
(b) Application of Tax.
(1) In General. Persons operating vending machines dispensing tangible personal property of a kind the gross receipts from the retail sale of which are subject to tax must report and pay to the state the tax upon gross receipts from all sales of such property made through such machines. Sales of tangible personal property through vending machines are presumed to be made on a tax-included basis. Gross receipts from retail sales of tangible personal property through the vending machines are total receipts less the amount of sales tax reimbursement included therein.
(A) Photocopies. Tax applies to the gross receipts from sales of photocopies through coin- or card-operated copy machines. However, library districts, municipal libraries, county libraries, or any vendor making sales pursuant to a contract with a library district, municipal library, or county library are consumers of photocopies sold at retail through a coin- or card-operated copy machine located at a library facility.
(B) Sales by Parent-Teacher Associations. Parent-teacher associations or equivalent associations under Regulation 1597(f) (18 CCR 1597(f)), are consumers of tangible personal property dispensed through vending machines and are not required to hold seller's permits by reason of such activities.
(C) Sales by Nonprofit, Charitable, or Education Organizations. Nonprofit, charitable, or education organizations dispensing tangible personal property for 15 cents or less through a vending machine are the consumers of such property and are not required to hold a seller's permit by reason of such activities.
(D) Sales of Water. Sales of purified drinking water through vending machines where the water enters the machine through local supply lines and is dispensed into the customer's own containers are exempt from the tax under Revenue and Taxation Code Section 6353.
(2) Food Products.
(A) Effective January 1, 1986, tax applies to the gross receipts from the retail sale of food products, including candy and confectionery, dispensed through a vending machine at retail for more than 15 cents unless otherwise exempted as provided below. Since sales through vending machines are presumed to be made on a tax-included basis, total receipts from the taxable retail sale of food products through vending machines should be adjusted to compensate for the sales tax included therein. The term "food products" does not include carbonated beverages. A vending machine operator is a consumer of, and not a retailer of, food products, including candy and confectionery, dispensed through a vending machine at retail for 15 cents or less, effective January 1, 1986. Tax is measured by the sale price to the vending machine operator of such items unless otherwise exempt. If the property sold to the operator is an exempt food product or a nonreturnable container, no tax is payable regardless of the nature of the product when dispensed through the vending machine, and regardless of whether facilities for consumption are furnished at locations of the vending machines. For the purposes of this subdivision, the term "candy and confectionery" includes candy-coated gum products.
(B) Operative January 1, 1988, tax does not apply to the sales, and the vending machine operator is the consumer, of any food products, including candy and confectionery other than beverages or hot prepared food products, sold through a coin-operated bulk vending machine if the amount of each sale is twenty-five cents ($0.25) or less. For purposes of this regulation, "bulk vending machine" means a vending machine containing unsorted food products, including candy and confectionery, which, upon insertion of a coin, dispenses those products in approximately equal portions, at random, and without selection by the customer. For the purposes of this subdivision, the term "candy and confectionery" includes candy-coated gum products.
(C) Beginning January 1, 1988, a partial exemption from the tax is allowed any retailer who receives gross receipts through vending machines from the sale of cold food products, hot coffee, hot tea and hot chocolate which are subject to the tax. The following percentages of the gross receipts from the sales of such products are subject to the tax: 77% for the calendar year 1988, 55% for the calendar year 1989, and 33% thereafter. This partial exemption does not apply to sales of hot prepared food products (except hot coffee, hot tea and hot chocolate) and receipts from such sales may not be included in the computation of the exemption.
"Gross receipts from the sale of cold food products, hot coffee, hot tea and hot chocolate" represents total receipts after adjusting for sales tax included. Therefore, in order to determine taxable receipts, an adjustment must be made to compensate for sales tax included in total receipts. Following is an example of the computation using the 7 1/4 percent rate:
Total receipts from sales of cold food products,
hot coffee, hot tea and hot chocolate
through vending machines........................ $10,000.00
Factor.......................................... 32.2289%
Taxable receipts................................ $3,222.89
Tax rate........................................ 7.25%
Tax included.................................... $233.66
Exempt receipts................................. $6,543.45
Proof: $10,000 - 233.66 = $9,766.34
$9,766.34 x 33% = 3,222.89

Gross receipts from the sale of cold food products, hot coffee, hot tea and hot chocolate subject to the tax may be calculated for the year 1990 and forward using the following percentages for the tax rates indicated:

TAX RATE PERCENTAGE TAX RATE PERCENTAGE
6.00% 32.3593% 7.50% 32.2030%
6.50% 32.3070% 7.625% 32.1900%
6.625% 32.2940% 7.75% 32.1771%
6.75% 32.2809% 7.875% 32.1641%
6.875% 32.2679% 8.00% 32.1512%
7.00% 32.2549% 8.125% 32.1383%
7.125% 32.2419% 8.25% 32.1254%
7.25% 32.2289% 8.375% 32.1125%
7.375% 32.2160% 8.50% 32.0996%

To compute the cold food factor for other tax rates the formula is as follows: Cold food factor percentage = 100 /[3.0303 + tax rate (decimal form)] Example: Cold food factor at 7.25% = 100/(3.0303 + .0725) = 100/3.1028 = 32.2289%
(D) Tax does not apply to sales of any food products, whether sold through a vending machine or otherwise, to students of a school by public or private schools, school districts, student organizations, or any blind person (as defined in Section 19153 of the Welfare and Institutions Code) operating a restaurant or vending stand in an educational institution under Article 5 (commencing with Section 19625) of Chapter 6 of Part 2 of Division 10 of the Welfare and Institutions Code.
(3) Definitions.
(A) Food Products. For the period July 15, 1991 through November 30, 1992, the term "food products" does not include snack foods (as defined in Regulation 1602 (18 CCR1602), "Food Products"), nonmedicated gum, candy, and confectionery. Sales during this period of such items through vending machines are subject to the tax unless exempted under subdivisions (b)(1) and (b)(2) above.
(B) Nonprofit Organizations. Nonprofit organizations include any group, association, or corporation which is formed for charitable, religious, scientific, social, literary, educational, recreational, benevolent or any other purpose, provided that no part of the net earnings of such organization inures to the benefit of any member, shareholder, director, officer, or any person having a personal and private interest in the activities of the organization. Examples of this type of organization are museums, veterans organizations, youth sportsmanship organizations, clubs such as the Kiwanis Club, fraternal societies, orders or associations operating under the lodge system such as the Loyal Order of the Moose, and student organizations. (continued)