California OTA Overrules CDTFA, Exempts Taxpayer’s Label Sales from Tax

The California Office of Tax Appeals (OTA) overruled the California Department of Tax and Fee Administration’s denial of the taxpayer’s petition for redetermination of a 2023 Notice of Determination. The taxpayer sold labeling systems and blank labels to California produce growers and packers to comply with produce traceability rules. The labels contained information like the state where the produce was grown, packing date, and barcodes to facilitate tracking. The dispute centered on whether the sales of labels qualified for tax exemptions or exclusions. The OTA found that the sales of labels were exempt from tax under the regulation exempting labels ...