Transworld Systems, Inc. v. County of Sonoma

Transworld Systems, Inc. (TSI), a collection service, appeals following the trial court’s grant of summary judgment for the County of Sonoma (the County) in TSI’s suit for refund of business property taxes. TSI contends the form letters it sends to debtors qualify as exempt business inventory of a nonprofessional service under Revenue and Taxation Code section 129 and California Code of Regulations, title 18, section 133. We agree.

Factual and Procedural Background

TSI sells its customers the right to submit a specified number of past due accounts to TSI for collection. TSI’s administrative and material costs are factored into the prepaid price. On behalf of its customers, TSI then sends the debtors a series of computer-generated letters on TSI’s preprinted forms. The customer chooses which series of letters each debtor will receive. Once that choice is made, the debtor receives a fixed series of form letters, printed by computer. The text of each series of letters is preset; only the debtor information and creditor information change. Except as required for data entry purposes, TSI does not review or analyze information submitted by the customer, nor does it offer…