Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
190.0000 CONSTRUCTION CONTRACTORS—Regulation 1521
(a) IN GENERAL—ACTIVITIES CONSTITUTING CONTRACTING OR MAKING OF IMPROVEMENTS
190.0233 Fabrication Labor Performed by Subcontractor-Fixtures. A taxpayer contracts with the property owner or a prime contractor to furnish and install certain types of fixtures. The taxpayer subcontracts the actual installation and assembly to its subcontractor. The taxpayer's subcontractor performs fabrication labor on the fixtures owned by the taxpayer prior to attachment. Subsequently, the subcontractor attaches the "fabricated fixture" to the real property.
Since the taxpayer does not sell the fixtures to the subcontractor, the taxpayer remains responsible to the customer for both the furnishing and installation of the fixtures. Thus, the taxpayer is the "construction contractor/retailer" within the meaning of Regulation 1521(b)(2)(B) with respect to the fixtures it furnishes, and tax applies to the taxpayer's sale of the fixture to the customer.
The processing or fabrication work performed on the fixture by the subcontractor prior to the installation by the subcontractor is a "sale" within the meaning of section 6006(b). It is a separate sale from the taxpayer's sale of the fixture. Thus, when a subcontractor does not furnish a fixture, but prior to installation performs processing or fabrication work resulting in the production of the completed fixture, and thereafter installs the fixture, the subcontractor is subject to tax on that portion of its charge attributable to processing or fabrication. (See Annotation 190.0660 (4/17/50).) Since the subcontractor is the retailer of fabrication labor, he or she may not accept a resale certificate from the taxpayer for such fabrication labor. 8/29/96.