(a) Definitions.
(1) Construction Contract.
(A) "Construction contract" means and
includes a contract, whether on a lump sum, time and material, cost plus, or
other basis, to:
1. Erect, construct, alter,
or repair any building or other structure, project, development, or other
improvement on or to real property, or
2. Erect, construct, alter, or repair any
fixed works such as waterways and hydroelectric plants, steam and atomic
electric generating plants, electrical transmission and distribution lines,
telephone and telegraph lines, railroads, highways, airports, sewers and sewage
disposal plants and systems, waterworks and water distribution systems, gas
transmission and distribution systems, pipelines and other systems for the
transmission of petroleum and other liquid or gaseous substances, refineries
and chemical plants, or
3. Pave
surfaces separately or in connection with any of the above works or projects,
or
4. Furnish and install the
property becoming a part of a central heating, air-conditioning, or electrical
system of a building or other structure, and furnish and install wires, ducts,
pipes, vents, and other conduit imbedded in or securely affixed to the land or
a structure thereon.
(B)
"Construction contract" does not include:
1. A
contract for the sale or for the sale and installation of tangible personal
property such as machinery and equipment, or
2. The furnishing of tangible personal
property under what is otherwise a construction contract if the person
furnishing the property is not responsible under the construction contract for
the final affixation or installation of the property
furnished.
(2)
Construction Contractor. "Construction contractor" means any person who for
himself or herself, in conjunction with, or by or through others, agrees to
perform and does perform a construction contract. "Construction contractor"
includes subcontractors and specialty contractors and those engaged in such
building trades as carpentry, bricklaying, cement work, steel work, plastering,
drywall installation, sheet metal work, roofing, tile and terrazzo work,
electrical work, plumbing, heating, air-conditioning, elevator installation and
construction, painting, and persons installing floor coverings, including
linoleum, floor tile, and wall-to-wall carpeting, by permanently affixing such
coverings to a floor. "Construction contractor" includes any person required to
be licensed under the California Contractors' State License Law (Business &
Professions Code Sections 7000 et seq.), and any person contracting with the
United States to perform a construction contract, whether such persons are
formed or organized under the laws of this state, or another state or
country.
(3) United States
Construction Contractor. "United States construction contractor" means a
construction contractor who for himself or herself, in conjunction with, or by
or through others, agrees to perform and does perform a construction contract
for the United States Government.
(4) Materials. "Materials" means and includes
construction materials and components, and other tangible personal property
incorporated into, attached to, or affixed to, real property by contractors in
the performance of a construction contract and which, when combined with other
tangible personal property, loses its identity to become an integral and
inseparable part of the real property. A list of typical items regarded as
materials is set forth in Appendix A.
(5) Fixtures. "Fixtures" means and includes
items which are accessory to a building or other structure and do not lose
their identity as accessories when installed. A list of typical items regarded
as fixtures is set forth in Appendix B.
(6) Machinery and Equipment. "Machinery and
equipment" means and includes property intended to be used in the production,
manufacturing or processing of tangible personal property, the performance of
services or for other purposes (e.g., research, testing, experimentation) not
essential to the fixed works, building, or structure itself, but which property
incidentally may, on account of its nature, be attached to the realty without
losing its identity as a particular piece of machinery or equipment and, if
attached, is readily removable without damage to the unit or to the realty.
"Machinery and equipment" does not include junction boxes, switches, conduit
and wiring, or valves, pipes, and tubing incorporated into fixed works,
buildings, or other structures, whether or not such items are used solely or
partially in connection with the operation of machinery and equipment, nor does
it include items of tangible personal property such as power shovels, cranes,
trucks, and hand or power tools used to perform the construction contract. A
list of typical items regarded as machinery and equipment together with a list
of typical items not regarded as machinery and equipment is set forth in
Appendix C.
(7) Time and Material
Contract. "Time and material contract" means a contract under which the
contractor agrees to furnish and install materials or fixtures, or both, and
which sets forth separately a charge for the materials or fixtures and a charge
for their installation or fabrication.
(8) Lump Sum Contract. "Lump sum contract"
means a contract under which the contractor for a stated lump sum agrees to
furnish and install materials or fixtures, or both. A lump sum contract does
not become a time and material contract when the amounts attributable to
materials, fixtures, labor, or tax are separately stated in the
invoice.
(b) Application
of Tax.
(1) United States Construction
Contractors.
(A) Materials and Fixtures.
United States construction contractors are consumers of materials and fixtures
which they furnish and install in the performance of contracts with the United
States Government. Either the sales tax or the use tax applies with respect to
sales of tangible personal property (including materials, fixtures, supplies,
and equipment) to contractors for use in the performance of such contracts with
the United States for the construction of improvements on or to real property
in this state. The fact that the contract may provide principally for the
manufacture or acquisition of tangible personal property is immaterial. The
sales tax, but not the use tax, applies even though the contractor purchases
the property as the agent of the United States.
(B) Machinery and Equipment. United States
contractors are retailers of machinery and equipment furnished in connection
with the performance of a construction contract with the United States
Government. Tax does not apply to sales of machinery and equipment to United
States contractors or subcontractors, provided title to the property passes to
the United States before the contractor makes any use of it. Such sales are
sales for resale, and the purchasing contractor may issue a resale certificate.
A contractor who uses the machinery or equipment before title passes to the
United States is the consumer of that machinery or equipment and either sales
tax or use tax applies with respect to the sale to or the use by the
contractor.
(2)
Construction Contractors Other than United States Construction Contractors.
(A) Materials.
1. In General. Construction contractors are
consumers of materials which they furnish and install in the performance of
construction contracts. Either sales tax or use tax applies with respect to the
sale of the materials to or the use of the materials by the construction
contractor.
2. When Contractor is
Seller. A construction contractor may contract to sell materials and also to
install the materials sold. If the contract explicitly provides for the
transfer of title to the materials prior to the time the materials are
installed, and separately states the sale price of the materials, exclusive of
the charge for installation, the contractor will be deemed to be the retailer
of the materials.
In the case of a time and material contract, if the
contractor bills his or her customer an amount for "sales tax" computed upon
his or her marked up billing for materials, it will be assumed, in the absence
of convincing evidence to the contrary, that he or she is the retailer of the
materials.
If the sale occurs in this state, the sales tax applies to
the contractor's (retailer's) gross receipts from the sale of the materials. If
the sale occurs prior to the time the property is brought into this state, the
contractor's (retailer's) customer is the consumer and his or her use (unless
otherwise exempt) is subject to use tax measured by the sales price. The
contractor must collect the use tax and pay it to this
state.
(B)
Fixtures.
1. In General. Construction
contractors are retailers of fixtures which they furnish and install in the
performance of construction contracts and tax applies to their sales of the
fixtures.
2. Measure of Tax.
a. In General. If the contract states the
sale price at which the fixture is sold, tax applies to that price. If the
contract does not state the sale price of the fixture, the sale price shall be
deemed to be the cost price of the fixture to the contractor.
b. Determining Cost Price.
If the contractor purchases the fixtures in a completed
condition, the cost price is deemed to be the sale price of the fixture to him
or her and shall include any manufacturer's excise tax or import duty imposed
with respect to the fixture prior to its sale by the contractor.
If the contractor is the manufacturer of the fixture, the
cost price is deemed to be the price at which similar fixtures in similar
quantities ready for installation are sold by him or her to other
contractors.
If similar fixtures are not sold to other contractors ready
for installation, then the cost price shall be deemed to be the amount stated
in the price lists, bid sheets or other records of the contractor.
If the sale price cannot be established in the above manner
and the fixture is manufactured by the contractor, the cost price shall be
deemed to be the aggregate of the following:
[1] Cost of materials, including such items
as freight-in and import duties,
[2] Direct labor, including fringe benefits
and payroll taxes,
[3] Specific
factory costs attributable to the fixture,
[4] Any manufacturer's excise tax,
[5] Pro rata share of all overhead
attributable to the manufacture of the fixture, and
[6] Reasonable profit from the manufacturing
operation which, in the absence of evidence to the contrary, shall be deemed to
be 5 percent of the sum of the preceding factors.
Jobsite fabrication labor and its prorated share of
manufacturing overhead must be included in the sale price of the fixture.
Jobsite fabrication labor includes assembly labor performed prior to attachment
of a component or a fixture to a structure or other real
property.
3. Exceptions-Leased Fixtures. In some
instances the construction contractor may furnish and install a fixture for a
person, other than the owner of the realty, who intends to lease the fixture in
place as tangible personal property as provided in section
6016.3
of the Revenue and Taxation Code and pay tax measured by rental receipts.
In this case the construction contractor may take a resale
certificate from the lessor at the time of the transaction and the sale to the
lessor will be considered to be a sale for resale. The resale certificate
should indicate that the fixture is purchased for resale by the purchaser as
tangible personal property under section
6016.3
of the Revenue and Taxation Code.
(C) Machinery and Equipment.
1. In General. Construction contractors are
retailers of machinery and equipment even though the machinery and equipment is
furnished in connection with a construction contract. Tax applies to the
contractor's gross receipts from such sales.
2. Measure of Tax.
a. In General. Tax applies to the gross
receipts from the sale of machinery and equipment furnished and installed by a
construction contractor. If the contract calls only for the furnishing and
installation of machinery and equipment, tax applies to the total contract
price less those charges excludible from gross receipts under Section
6012
of the Revenue and Taxation Code.
b. Lump Sum Contracts-Determining Gross
Receipts. If the contract is for a lump sum and includes the furnishing and
installation of materials, fixtures, and machinery and equipment, the gross
receipts from the sale of the machinery and equipment shall be the price at
which similar quantities ready for installation are sold at retail delivered in
the market area where the installation takes place.
If there is no such retail price for the machinery and
equipment, then the gross receipts shall be determined from the contracts,
price lists, bid sheets, or other records of the contractor.
If the gross receipts cannot be established in the above
manner and the machinery and equipment is manufactured by the contractor, the
gross receipts from the sale shall be the aggregate of the following:
[1] Cost of materials, including such items
as freight-in and import duties,
[2] Direct labor, including fringe benefits
and payroll taxes,
[3] Specific
factory costs attributable to the machinery or equipment,
[4] Any manufacturer's excise tax,
[5] Pro rata share of all overhead
attributable to the machinery or equipment, including overhead attributable to
manufacturing, selling, contracting, and administration, and
[6] Reasonable profit from the manufacture
and sale of the machinery or equipment which, in the absence of evidence to the
contrary, shall be deemed to be 5 percent of the sum of the preceding factors.
Jobsite fabrication labor and its prorated share of
manufacturing overhead must be included in the sale price of the machinery or
equipment. Jobsite fabrication labor includes assembly labor performed prior to
attachment of a component or the machinery or equipment to a structure or other
real property.
(D) Cost Plus A Fee Contracts. When a
contractor enters into a construction contract for a cost plus a fee or time
and materials plus a fee, whether the fee is a lump sum or a percentage of
costs, the fee is not included in the measure of tax. When the contractor is
the manufacturer of the fixtures or machinery and equipment, the "cost price"
of the fixtures and the gross receipts from the sale of the machinery and
equipment shall be determined in accordance with (B) and (C)
above.
(3) Miscellaneous
Sales by Contractors. In addition to sales of fixtures and machinery and
equipment, tax applies to all retail sales by contractors of tangible personal
property, including parts, supplies, tools, construction equipment, buildings
severed or to be severed by the contractor, and furniture, including furniture
sold with a building, even though the building is sold "in place."
(4) Permits. Contractors engaged solely in
performing construction contracts which do not involve the sale and
installation of fixtures and who do not also engage in business as sellers or
retailers are not required to hold seller's permits. However, if a contractor
is a seller or retailer because he or she makes sales of fixtures, materials,
or machinery and equipment, or other tangible personal property either in
connection with or as part of a construction contract, or otherwise, he or she
is required to hold a seller's permit.
(5) Supplies and Tools for Self-Use.
Contractors are the consumers of supplies such as oxygen, acetylene, gasoline,
acid, thread-cutting oil, and tools and parts for tools, which they use in
their business, and the tax applies to the sale of such supplies and tools to
contractors.
(6) Exemption
Certificates.
(A) Resale Certificates.
Contractors holding valid seller's permits may purchase fixtures and machinery
and equipment for resale by issuing resale certificates to their suppliers.
They may not purchase materials for resale unless they are also in the business
of selling materials.
A contractor cannot avoid liability for sales or use tax on
materials or fixtures furnished and installed by him or her by taking a resale
certificate from the prime contractor, interior decorators, designers,
department stores, or others. However, under the circumstances described in
subsection (b) (2) (B)3., a contractor may take a resale certificate for
fixtures furnished and installed by him or her for a person other than the
owner of the realty.
(B)
Exemption Certificates for Out-of-State Use. Sales tax does not apply to sales
of tangible personal property to a construction contractor who holds a valid
California seller's permit when the property is used by the contractor outside
this state in his or her performance of a contract to improve real property and
as a result of such use the property is incorporated into and becomes a part of
real property located outside this state. This exemption is available only if
at the time of the purchase the contractor certifies in writing to the seller
that he or she holds a valid California seller's permit (giving the number of
that permit and identifying the property purchased) and states that the
property will be used in the manner stated above. The certificate must be
signed by the contractor or an authorized employee. Such a certification may
appear in the body of a purchase order which bears the signature of the
purchaser. Any certificate given subsequent to the time of purchase will not be
recognized.
If the property purchased under a certificate is used by
the contractor in any other manner or for any other purpose than stated in the
certificate, the contractor shall be liable for sales tax as if he or she were
a retailer making a retail sale of the property at the time of such use, and
the sale price of the property to him or her shall be deemed the gross receipts
from the sale.
(C)
Deductions for Tax-Paid Purchases Resold. A contractor may claim a "tax-paid
purchases resold" deduction for any property of which he or she is the retailer
when he or she has reimbursed his or her vendor for tax which the vendor is
required to pay to the State or has paid the use tax with respect to the
property, and has resold the property prior to making any use of it. In the
event that the contractor sells short ends or pieces which are not used other
than in severing them from larger units purchased by him or her and as to which
he or she has paid sales tax reimbursement or use tax, he or she may claim the
deduction for tax-paid purchases resold, but the amount of the deduction shall
not exceed the price at which he or she sells such short ends or
pieces.
(c)
Particular Applications.
(1) Draperies and
Drapery Hardware. Persons who contract to sell and install draperies including
drapery hardware, such as brackets, rods, tracks, etc., are retailers of the
items which they furnish and install. Tax applies to the entire contract price
exclusive of the charge for installation which charge should be separately
stated. Installers who furnish drapery hardware or other tangible personal
property may accept resale certificates from department stores or other sellers
to furnish and install the draperies and drapery hardware.
The department stores or other sellers furnishing resale
certificates are required to pay the tax to the state upon their selling price
of the draperies and drapery hardware, exclusive of installation charges. The
installer should segregate his or her installation charge in order that the
department store or other seller may properly segregate its charge attributable
to installation for purposes of determining its taxable gross
receipts.
(2) Prefabricated
Cabinets. A cabinet will be considered to be "prefabricated" and a "fixture"
when 90 percent of the total direct cost of labor and material in fabricating
and installing the cabinet is incurred prior to affixation to the realty. In
determining this 90 percent, the total direct cost of all labor and materials
in fabricating the cabinet to the point of installation will be compared to the
total direct cost of all labor and materials in completely fabricating and
installing the cabinet. If more than one cabinet is fabricated and installed
under the contract, each cabinet will be considered separately in determining
whether the cabinet is prefabricated.
(3) Prefabricated Buildings. Prefabricated
units such as commercial coaches, house trailers, etc., registered with the
Department of Motor Vehicles or the Department of Housing and Community
Development, are tangible personal property even though they may be connected
to plumbing and utilities. A mobilehome which meets or is modified to meet, all
applicable building codes and regulations and which is permanently affixed to
realty, is an improvement to realty and is not personal property.
A contract to furnish and install a prefabricated or
modular building which is not a factory-built school building (relocatable
classroom) is a construction contract whether the building rests in place by
its own weight or is physically attached to realty. It is immaterial whether
the building is erected upon or affixed to land owned by the owner of the
building or is leased to the landowner or lessee of the land.
Generally, a contract to furnish and install a small
prefabricated building, such as a shed or kiosk, which is movable as a unit
from its site of installation, is a construction contract only if the building
is required to be physically attached to real property by the seller, upon a
concrete foundation or otherwise. The sale of such a unit to rest in place by
its own weight, whether upon the ground, a concrete slab, or sills or piers, is
not a construction contract even though the seller may deliver the unit to its
site of use.
Prefabricated or modular buildings which are "factory-built
housing" where permanently affixed to the realty are improvements to realty.
The manufacturer of factory-built housing who contracts to furnish and install
the factory-built housing manufactured by him or her is the consumer of the
materials used in building and installing the factory-built housing and the
retailer of the fixtures. Tax applies as provided in (b)
above.
(4) Factory-built
School Buildings.
(A) General. On and after
September 26, 1989, a contract to furnish and install a factory-built school
building is not a construction contract but rather is a sale of tangible
personal property.
(B) Definitions.
1. "Factory-built School Building." The term
"factory-built school building" (relocatable classroom) means and includes:
a. for the period September 26, 1989 through
September 12, 1990, any building designed to be used as a school building as
defined in sections 39214 and 81165 of the Education Code and so used. A
factory-built school building must be designed in compliance with state laws
for school construction and approved by the structural safety section in the
office of the State Architect. It must be wholly or substantially manufactured
at an offsite location for the purpose of being assembled, erected, or
installed on a school site.
b.
effective September 13, 1990, any building which is designed or intended for
use as a school building and is wholly or substantially manufactured at an
offsite location for the purpose of being assembled, erected, or installed on a
site owned or leased by a school district or a community college district. A
factory-built school building must be designed and manufactured in accordance
with building standards adapted and approved pursuant to chapter 4 (commencing
with section 18935) of part 2.5 of division 13 of the Health and Safety Code
and must be approved by the structural safety section in the office of the
State Architect.
The term does not include buildings licensed by either the
Department of Motor Vehicles or the Department of Housing and Community
Development. The term also does not include prefabricated or modular buildings
which are similar in size to, but which are not, "factory-built school
buildings". It is immaterial whether the building is erected upon or affixed to
land owned by the owner of the building or is leased to the landowner or lessee
of the land.
2.
"Consumer."
a. For the period September 26,
1989 through September 12, 1990, the term "consumer" as used herein means
either
(1) a school or a school district
or
(2) a contractor who purchases a
factory-built school building for the purpose of fulfilling the requirements of
an existing contract with a school or school district to furnish and install
such building.
b.
Effective September 13, 1990, the term "consumer" as used herein means either
(1) a school district or a community college
district or
(2) a contractor who
purchases a factory-built school building for the purpose of fulfilling the
requirements of an existing contract with a school district or a community
college district to furnish and install such
building.
(C) Place of Sale. The place of sale or
purchase of a factory built school building is the place of business of the
retailer regardless of whether the sale of the building includes installation
or whether the building is placed upon a permanent foundation.
(D) Application of Tax.
1. Tax applies to 40 percent of the sales
price of the building to the consumer excluding any charges for placing the
completed building on the site. The sales price of the building shall include
amounts representing tangible personal property installed in the building by a
subcontractor, whether prior to or after installation of the building at the
site, provided such installation is called for in the prime contract for the
building.
A separate contract to furnish and install tangible
personal property in a factory-built school building after installation of the
building at the site is a construction contract and the tax applies as in (b)
above. Any contract or subcontract for site preparation (e.g., foundation) is a
construction contract and tax applies as in (b) above.
2. The sale of a factory-built school
building to a purchaser who will resell the building without installation is a
sale for resale and the seller may accept a resale certificate from the
purchaser. If the purchaser then sells to a contractor who has an existing
contract to install the building on a school site, tax will apply as in
(c)(4)(D)1 above. If tax has been paid on the purchase price of a factory-built
school building which is subsequently resold for installation, a tax-paid
purchases resold deduction may be taken as provided in Regulation 1701
(
18 CCR
1701).
(E) Exclusion Certificate. For the period
September 26, 1989, through September 12, 1990, if the purchaser certifies in
writing to the retailer that the factory built school building purchased will
be consumed in a manner or for a purpose entitling the retailer to exclude 60%
of the gross receipts or sales price from the measure of tax and uses the
property in some other manner or for some other purpose, the purchaser shall be
liable for payment of tax measured by 60% of the sales price. For the above
stated period, all retailers who make retail sales of "factory-built school
buildings" claimed to be subject to tax measured by 40 percent of the sales
price must obtain from the "consumer" a signed certificate substantially in the
form set forth below.
CLAIM FOR 60% EXCLUSION FROM TAX ON PURCHASE OF
FACTORY-BUILT SCHOOL BUILDINGS
(Sec. 6012.6. Rev. & Tax. Code)
I hereby certify that the factory-built school building
that I
___________________________
(Name of Purchaser-Consumer)
am purchasing under the authority of this certificate
from
___________________________
(Name of Retailer)
will be used as a school building as defined in Sales and
Use Tax Regulation 1521. My seller's permit number, if any, is
____________________.
I further certify that I understand and agree that if the
property purchased under the authority of this certificate is used by the
purchaser for any purpose other than indicated above, the purchaser shall be
liable for payment of tax to the State Board of Equalization at the time of
such use measured by 60% of the sales price of the factory-built school
building.
___________________________
Signed by
(Name of Purchaser)
___________________________
As:
(Owner, Partner, Purchasing Agent, etc.)
___________________________
Date
(5) Mobilehomes Installed for Occupancy as
Residences.
Operative July 1, 1980, a special measure of sales or use
tax is provided for a mobilehome sold to be affixed to realty for occupancy as
a residence.
A mobilehome dealer who sells a new mobilehome to a
construction contractor to be affixed to land for occupancy as a residence is
the "retailer-consumer" of the property and is required to pay tax for the
period in which the sale was made by the dealer measured by an amount equal to
75 percent of the retailer-consumer's purchase price of the mobilehome.
A construction contractor who withdraws a new mobilehome
from an inventory purchased for resale to be affixed to realty for occupancy as
a residence in the performance of a construction contract is required to pay
tax measured by 75 percent of the purchase price by his or her mobilehome
vendor except where the purchase is made directly from a mobilehome
manufacturer. In the absence of satisfactory evidence of the vendor's purchase
price it shall be presumed that the measure of tax for the transaction is an
amount equivalent to 60 percent of the sales price of the mobilehome to the
construction contractor.
A mobilehome manufacturer who sells a new mobilehome
directly to a construction contractor for installation to real property for
occupancy as a residence is required to pay tax measured by 75 percent of the
sales price at which a similar mobilehome ready for installation would be sold
by the manufacturer to a retailer-consumer in this state. A construction
contractor who withdraws a new mobilehome from an inventory purchased from a
manufacturer for resale must pay tax measured by 75 percent of his or her
purchase price.
A mobilehome manufacturer who performs a construction
contract by permanently affixing a new mobilehome to real property is the
consumer of the material and the retailer of fixtures installed by him or her
and the tax applies as set forth in paragraph (b) above.
Reference should also be made to the provisions of
Regulation 1610.2 for additional interpretative rules relating to custom
additions to the mobilehome prior to sale, transfers of nonvehicle items, and
the application of the tax to a purchase made from an out-of-state
retailer.
(6) Repair
Contracts. A contract to repair a fixture in place or a fixture the contractor
is required by the contract to reaffix to the realty is a construction
contract. Sales or use tax applies to the gross receipts or sales price of the
parts sold by a contractor who is a retailer under this provision. Either sales
tax or use tax applies to the sales price of the parts sold to or used by a
contractor who is a consumer under this provision.
(A) United States Construction Contractors. A
United States construction contractor is the consumer of the parts furnished in
the performance of a construction contract to repair a fixture.
(B) Construction Contractors Other Than
United States Construction Contractors.
1. A
contractor is the retailer of the parts furnished in the performance of a
construction contract to repair a fixture when the sale price of the parts is
billed separately from the repair labor.
2. A contractor is the consumer of the parts
furnished in the performance of a lump sum construction contract to repair a
fixture.
(7)
Elevator Installations. A large number of components are included in the
installation of an elevator system. Those portions constituting the cage or
platform and its hoisting machinery are fixtures. The balance of the
installation, if attached to a structure or other real property will generally
be "materials."
Similarly, installation of escalators and moving sidewalks
are in part fixtures and in part materials.
Following are examples of components constituting part of
the cage or platform and its hoisting machinery, and which are fixtures:
alarm bell
cab or car
car doors
car platform and sling
door hanger on cab
door openers
door operator on cab or car
door safety edge on cab
door sills on cab
electronic door protector
jack assembly
motors
power units and control boxes
pumps
pushbuttons on cab
wire and piping (which are components of a fixture)
Following are examples of components constituting
"materials" when attached to realty:
car guides
casing section of jack assembly
guide rails
hoistway doors
hoistway door frames
hoistway door safety edge
hoistway door sills and jambs
hoistway door supports
hoistway entrance
pushbuttons on hoistway
rail brackets
sill, struts
sound insulating panels on "materials"
structural steel (unless part of cab, car, or other
"fixture")
valve strainer
wire and piping attached to "materials"
Following are examples of components constituting parts of
escalators or moving sidewalks which are fixtures:
staircase
moving sidewalk
moving handrails
chains
sprockets
motors
other operating mechanisms
(8) Telephone Switchboards and Instruments.
Telephone switching equipment installed in a building specifically designed to
accommodate the equipment or attached to a building or structure in a manner
such that its removal would cause damage to the equipment or building in which
it is installed will be considered to be "fixtures" under paragraph (a)(5) of
this regulation.
Telephone handsets, modular switching equipment and
standardized, off-shelf, general purpose switching equipment sold for use in
general purpose office buildings constitute machinery and equipment under
paragraph (a)(6) of this regulation. Handsets, modular switching equipment and
standardized equipment were previously classified as fixtures.
This change in classification shall be applied
prospectively only with respect to construction contracts entered into on and
after July 1, 1988, by contractors other than United States construction
contractors.
(9) Deep-Well
Agricultural Pumps. A deep-well agricultural pump is tangible personal property
if installed so that it rests in position by force of gravity and is not
otherwise affixed to the land.
The pump is a fixture if:
(A) It is affixed to the land such as by
concrete, bolts or screws,
(B) It
is physically connected to an irrigation system such as by pipes or couplings
so as to become an integral part of the system, or
(C) It is enclosed by a pump house or other
building or structure.
(10) Remote Control Garage Door Openers.
Remote control garage door opening units are fixtures. Portable transmitter
units furnished pursuant to a construction contract are deemed to be fixtures
and are taxable as provided in subdivision (b)(2)(B). Sales of portable
transmitter units not a part of a construction contract, as, for example, sales
of replacement units, are retail sales of tangible personal property and
subject to tax as such.
(11) Excess
Reimbursement.
The excess tax reimbursement provisions of Regulation 1700
apply to construction contractors.
(12) On-Premise Electric Signs
(A) An on-premise electric sign is an
electrically powered or illuminated structure, housing, sign, device, figure,
statuary, painting, display, message, placard, or other contrivance or any part
thereof affixed to real property and intended or used to advertise, or to
provide data or information in the nature of advertising, for any of the
following purposes:
1) To designate,
identify, or indicate the name or business of the owner or occupant of the
premises upon which the advertising display is located, or
2) To advertise the business conducted,
services available or rendered, or the goods produced, sold, or available for
sale, upon the property where the advertising display has been
erected.
(B) Application
of Tax. An on-premise electric sign is a fixture and tax applies to the sale
price of the sign. Notwithstanding the provisions of 1521(b)(2)(B), operative
October 1, 2000, if the contract does not state the sale price of the sign, tax
applies to 33 percent of the contract price of on-premise electric signs that
are furnished and installed by the seller. "Contract price" includes charges
for materials, fabrication labor, installation labor, overhead, profit, and
other charges associated with the sale and installation of the sign. If a
contract provides that a contractor is to install an on-premise electric sign
furnished by a third party, the charges for installation are not taxable. If a
seller furnishes but does not install an on-premise electric sign, the seller
is a retailer of the sign and tax applies to the total contract price.
Separately stated charges for transportation are subject to
tax as defined in Regulation 1628, Transportation
Charges.
(13) Solar Cells, Solar Panels and Solar
Modules. A contract to furnish and install a solar energy system onto a
structure or realty is a construction contract which involves furnishing and
installing both materials and fixtures. A solar energy system is defined as any
solar collector or other solar energy device that provides for the collection
and distribution of solar energy and, where applicable, the storage of solar
energy.
(A) Materials. Photovoltaic (PV)
cells, solar panels and solar modules, including both solar thermal panels and
solar electric PV panels, are considered materials when they function in the
same manner as other materials such as roofing, windows, or walls and are
incorporated into, attached to, or affixed to real property and, as such, lose
their identity to become an integral and inseparable part of the real property.
Examples of these types of solar panels include, but are not limited to, PV
integrated skylights, PV panels used to function as a roof on a parking lot
shade structure, and PV integrated roofing tiles.
Other materials include, but are not limited to, wiring,
wiring harnesses, strapping, piping, and mounting systems. Mounting systems
include rack framing brackets that are installed on roofs.
(B) Fixtures. Photovoltaic (PV) cells, solar
panels and solar modules, including both solar thermal panels and solar
electric PV panels, are considered fixtures when they are necessary to a
building or other structure and do not lose their identity as accessories when
installed. Examples of these types of solar panels include, but are not limited
to, rack mounted solar panels installed on roofs and solar panels used in
free-standing solar arrays.
Other items included in the solar energy system which are
considered fixtures include, but are not limited to, terminal boxes, DC and AC
disconnect boxes, inverters, transformers, batteries and pumps.
Contractors furnishing and installing solar energy systems
that include fixtures are required to hold seller's permits as described in
subdivision (b)(4).
(C) For
the purposes of subdivisions (c)(13)(A) and (c)(13)(B), a charge for labor to
affix solar panels purchased in a completed condition to a mounting system is
not subject to tax.
Appendix A
The following is a list of typical items regarded as
materials:
Asphalt
Bricks
Builders' hardware
Caulking material
Cement
Conduit
Doors
Ducts
Electric wiring and connections
Flooring
Glass
Gravel
Insulation
Lath
Lead
Lime
Linoleum
Lumber
Macadam
Millwork
Mortar
Oil
Paint
Paper
Photovoltaic (solar) integrated roofing tiles and
skylights
Piping, valves, and pipe fittings
Plaster
Power poles, towers, and lines
Putty
Reinforcing mesh
Roofing
Sand
Sheet metal
Steel
Stone
Stucco
Tile
Wall coping
Wallboard
Wallpaper
Wall-to-wall carpeting (when affixed to the floor)
Weather stripping
Windows
Window screens
Wire netting and screen
Wood preserver
Appendix B
The following is a list of typical items regarded as
fixtures:
Air conditioning units
Awnings
Burglar alarm and fire alarm fixtures
Cabinets, counters, and lockers (prefabricated)
Cranes1 (including moving parts
of cranes) affixed or annexed to a building, structure or fixed work
Electric generators (affixed to and accessory to a
building, structure or fixed works)
Elevators, hoists, and conveying units
Furnaces, boilers, and heating units
Lighting fixtures
Plumbing fixtures
Refrigeration units
Signs
Television antennas
Transformers and switchgear
Vault doors and equipment
Venetian blinds
Appendix C
The following are lists of typical items regarded
as:
Machinery and Equipment
Drill presses
Electric generators (unaffixed, or, if affixed, which meet
the requirements
of subparagraph (a)(6))
Lathes
Machine tools
Printing presses
Not Machinery or Equipment
Fixtures and materials as defined in this regulation
Wiring, piping, etc., used as a source of power, water,
etc., for machinery and equipment
Radio transmission antennas
Large tanks (i.e., over 500 barrel capacity)
Fire alarm systems
Street light standards
Cooling towers other than small prefabricated cooling
units
__________
1 Moving parts of cranes are
classified as machinery and equipment when furnished and installed pursuant to
fixed price construction contracts entered into prior to July 1,
1985.
