Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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190.0000 CONSTRUCTION CONTRACTORS—Regulation 1521

Annotation 190.0173


190.0173 Custom Designed Area Rugs, Wall Hangings, and Carpeting. A taxpayer contracts with designers, architects and builders for the design and fabrication of custom designed area rugs, wall hangings and carpeting. The contracts may or may not require installation by the taxpayer. In some cases the taxpayer furnishes the carpet material and in other cases the customer furnishes the carpet material.

Where the taxpayer attaches carpeting, the taxpayer is a construction contractor and therefore the consumer of the materials. The taxpayer may not accept resale certificates from the customer. Where the taxpayer does not attach property to the realty, it is the retailer of the property and may accept a resale certificate from the customer.

Custom area rugs and custom wall hangings are tangible personal property and no tax applies to either charges by the taxpayer or charges to the taxpayer if a resale certificate is taken in good faith. This is true regardless of whether the taxpayer or the customer furnishes the material and regardless of whether or not the taxpayer places the property.

With respect to custom designed wall-to-wall carpeting, charges by the taxpayer for carpet, design, and measurement or template fees as well as all related charges are taxable regardless of who supplies the material if the customer installs the carpeting. Charges by the taxpayer are not taxable if the taxpayer installs the carpeting pursuant to a construction contract where the taxpayer is considered to be the consumer.

In some cases the taxpayer pulls up carpeting at the customer's site, designs and fabricates a custom design carpet which is reinstalled. If the taxpayer reinstalls the carpeting, tax does not apply to the charges to the customer but does apply to purchases by the taxpayer. If the customer reinstalls the carpeting, tax applies to the taxpayer's charges to the customers. 12/20/89.