California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 4 - Sales and Use Tax › Article 5 - Installers, Repairers, Reconditioners › Section 1546 - Installing, Repairing, Reconditioning in General

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(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.1
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.2 "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,3 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).
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1 Parts furnished for repairing
					 such property as motor vehicles, airplanes, bicycles, machinery, refrigerators,
					 farm implements, musical instruments, radios, television sets, boats and
					 furniture.
2 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 ..."
3 Parts furnished for repairing
					 such property as tires (retreading and recapping, see regulation 1548), tubes,
					 clothing, fishing rods, watches, and jewelry (see regulation
					 1553).