Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 440.1237


(7) Miscellaneous Specific Aids

440.1237 Hormone Rooting Powder and Liquid. Sales tax applies to the sales of rooting powders and liquids. Rooting hormones are described as follows: "They are placed on the tip end of the cutting. Upon watering and with the proper temperature and other greenhouse or growing practices, rooting hopefully occurs. After rooting, the stock is either placed in containers or sold as rooted cuttings for others to grow to proper size for resale . . . The hormones are used in the production of the finished product."

Indole 3 butyric acid and napthalenaecetic acid, the active ingredient of the rooting powder and liquid, are growth regulators used by the growers to promote the rooting of plants. The primary purpose of such growth regulators is to promote the rooting of the plants. Only after this rooting function is performed and the rooting has occurred are the rooted plants resold by the growers.

The resold plant having been rooted by the use of rooting products is not sufficient to conclude that the growers are reselling the rooting product. Further research leads to the conclusion that during the rooting process, the growth regulators are metabolized into the cells of the plants or are exhausted and detoxified by indiscriminate reactions that are meaningless to cell regulation. It is also concluded that the growers purchase the rooting products for the purpose of rooting the plants before they are sold. A small amount of unexhausted and toxic rooting powder or liquid still being active in the rooted plant would be incidental to the growers purpose and would not change the conclusion. The courts have held that the sale of chemicals for use in a manufacturing process is a taxable retail sale where only a small and uncertain portion of the elements of the chemicals are retained in the finished product. (American Distilling Company v. State Board of Equalization, 55 Cal.App.2d 799, 804.) 11/17/71.