Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
190.0000 CONSTRUCTION CONTRACTORS—Regulation 1521
(b) SPECIFIC PROPERTY AS "MATERIALS" OR "FIXTURES"
190.2107 Removable Pool Fencing. A company contracts to install protective pool fencing and posts which is advertised to be removable in minutes. The materials consist of prefabricated plastic covered fencing in sections up to 12' long which attach to posts which are inserted into sleeves which are either aluminum into which the posts slip, or vinyl into which the posts twist and lock. The sleeves are permanently fitted into holes which must be drilled in the decking around the pool. In some instances, additional support must be installed under the decking and in other cases, cement curb must be installed. The taxpayer bills lump sum with no mention of sales tax.
If the contract is a construction contract, the contractor is the consumer of the tangible personal property furnished and installed, but if it is a contract for the sale and installation of tangible personal property, the contractor is the retailer of that property. To be a construction contract, it must be a contract to make an improvement on or to real property, affixed to the land in the manner set forth in Civil Code section 660, which in part says that a thing is affixed to land when it is . . . imbedded in it, such as walls; permanently resting on it, such as buildings; or permanently attached to what is thus permanent, as by means of cement, plaster, nails, bolts or screws.
Using these criteria, the permanently affixed elements of the fencing contract are the sleeves, the under-deck support lumber, and the cement curbing. The posts and fencing and any latching devices are by design removable, and are therefore not permanently attached. The taxpayer is the retailer of these items and the consumer of the materials included in the permanently attached items. Labor to drill post holes and install the posts and fencing is not subject to tax. 8/23/94.