Fischbach & Moore, Inc. v. State Board of Equalization

The issue is whether materials purchased by plaintiffs-contractors for construction of an electrical transmission line for an agency of the United States are taxable under the California Sales and Use Tax Law (Rev. & Tax. Code, §§ 6001, 6051, 6201).

In 1962 plaintiffs contracted with the Bureau of Reclamation, United States Department of the Interior, to construct a transmission line in the Central Valley. The bid price in rounded figures was $10,611,000. Included among the contractors’ expenses were $2,323,000 for purchase of aluminum transmission cable, $522,000 for transmission line insulators and $2,473,000 for fabricated steel used to construct support towers. On these purchases of materials plaintiffs gave the sellers resale certificates. Plaintiffs contracted and acted on the assumption that these expenses were tax-exempt sales to the United States, a belief based on an August 1960 opinion of the State Board of Equalization dealing with the application of sales and use taxes to construction of transmission lines. The opinion declared that the board regards transmission lines as personal property, that “contractors installing such lines are retailers, and the tax…