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 3 - Manufacturers, Producers, Processors › Section 1524 - Manufacturers of Personal Property

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) In General. Tax applies to the gross
				  receipts from retail sales (i.e., sales to consumers) by manufacturers,
				  producers, processors, and fabricators of tangible personal property the sale
				  of which is not otherwise exempted. The measure of the tax is the gross
				  receipts of, or sales price charged by, the manufacturer, producer, processor,
				  or fabricator, from which no deduction may be taken on account of the cost of
				  the raw materials or other components purchased, or labor or service costs to
				  create or produce the tangible personal property, or of any step in the
				  manufacturing, producing, processing, or fabricating, including work performed
				  to fit he customer's specific requirements, whether or not performed at the
				  customer's specific request, or any other services that are a part of the sale.
				  In addition, no deduction may be taken on account of interest paid, losses, or
				  any other expense.
(b) Particular
				  Applications.
(1) Alteration of New and Used
				  Items.
(A) Alteration of New Items means and
				  includes any work performed upon new items such as garments, bedding,
				  draperies, or other personal and household items to meet the requirements of
				  the customer, whether the work involves the addition of material to the item,
				  the removal of material from the item, the rearranging or restyling of the
				  item, or otherwise altering the item, when such alterations result in the
				  creation or production of a new item or constitute a step in the creation or
				  production of a new item for the customer.
Charges for the alteration of new items are subject to tax,
					 except as provided in subdivision (c)(4) of Regulation 1506, regardless of
					 whether the charges for the alterations are separately stated or included in
					 the price of the item, or whether the alterations are performed by the seller
					 of the item or by another person. Persons engaged in the producing, processing
					 or fabricating of new items are retailers, not consumers, of the alterations
					 provided to the customer and are required to hold a seller's
					 permit.
(B) Alteration of
				  Used Items means and includes the mending, shortening or lengthening, taking in
				  or letting out, or otherwise altering used items such as garments, bedding,
				  draperies, or other personal and household items when such alterations merely
				  refit or repair the item for the use for which it was created or produced.
Charges for the alteration of used items are not subject to
					 tax. Generally, persons performing the alteration of used items are consumers,
					 not retailers, of the supplies and materials furnished in connection with the
					 alterations, and tax applies to the sale of the supplies and materials to such
					 persons.
Except as provided in subdivision (c)(4) of Regulation
					 1506, persons performing the alteration of used items are retailers, not
					 consumers, of the supplies and materials furnished in connection with the
					 alterations when the retail value of the supplies and materials is more than 10
					 percent of the total charge for the alterations, or if the invoice to the
					 customer includes a separate charge for such property. When such persons are
					 retailers, not consumers, tax applies to the fair retail selling price of the
					 supplies and materials to the customer.
When the retail value of the supplies and materials is more
					 than 10 percent of the total charge to the customer, the person performing the
					 alterations must segregate on the invoice to the customer and in its records,
					 the fair retail selling price of the supplies and materials from the charge for
					 the alterations. "Total charge" means the combined total of the retail value of
					 the supplies and materials furnished or consumed as part of the alterations and
					 the labor charges for the alterations.