Laws, Regulations & Annotations


Business Taxes Law Guide – Revision 2021

Sales And Use Tax Court Decisions

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Duffy v. State Board of Equalization … (1984)

Alterations of New Clothing Are Taxable as Fabrication Labor

Plaintiff, a dry cleaning and tailoring shop, altered new clothing for customers who had purchased the clothing elsewhere and had not worn the clothing except for trying on or fitting. The Board estimated and determined tax on the alteration charges as fabrication labor under Revenue and Taxation Code section 6006(b) and Regulation 1524. The plaintiff filed an action for refund, and the trial court entered judgment for the plaintiff.

The court of appeal reversed and held in favor of the Board. The court held:

(1) Charges for alterations to new clothing, furnished by the customer, constituted a step in the producing or fabricating of a product and were therefore taxable as sales.

(2) Fabrication labor is taxable even though the taxpayer, rather than the customer, furnished economically insignificant materials, such as thread, to assemble or hold together the materials supplied by the customer.

(3) A transfer of title to tangible personal property is not necessary to constitute a taxable sale under section 6006(b).

(4) The phrase "new clothing" in Regulation 1524 is not unconstitutionally vague; the regulation itself, the Board's rulings, and judicial construction of section 6006(b) gave taxpayer reasonable notice that he would be liable for sales tax.

(5) Taxpayer failed to exhaust his administrative remedies when he refused to cooperate with the Board in arriving at a fair calculation of tax due. Duffy v. State Board of Equalization (1984) 152 Cal.App.3d 1156.