Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
190.0000 CONSTRUCTION CONTRACTORS—Regulation 1521
(a) IN GENERAL—ACTIVITIES CONSTITUTING CONTRACTING OR MAKING OF IMPROVEMENTS
190.0976 Subcontracting—Furnishing/Installing Cabinets. A enters into a contract with C to furnish and install prefabricated cabinets (fixtures) for a lump-sum price of $10,000. A enters into a subcontract with B for B to manufacture and install the prefabricated cabinets. A prepares the plans, and B then manufactures and installs the cabinets. A or B will bill C for the amount of the contract price.
The basic rule in determining who is the contractor regarded as the retailer of the cabinets, A or B, is that the last person who has the true responsibility to furnish as well as the true responsibility to install the cabinets is the construction contractor/retailer with respect to the cabinets. Here, since A subcontracts both the furnishing and installing of the cabinets, its subcontractor, B, is the last person who has the true responsibility to both furnish and install the cabinets, and is the construction contractor/retailer. (Regulation 1521(a)(1)(B) 2.) Since the contract between A and B does not state the sales price at which B sells the cabinets, the sales price is deemed to be the cost price of the fixtures to B, determined pursuant to the provisions of Regulation 1521(b)(2)(B)2.b.
In this situation, A has no tax liability. Since B is the retailer, it owes sales tax on its sale of the cabinets. A may not issue a resale certificate for the cabinets. 11/1/95.