Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
190.0000 CONSTRUCTION CONTRACTORS—Regulation 1521
(b) SPECIFIC PROPERTY AS "MATERIALS" OR "FIXTURES"
190.2225 Storage System (Moveable) and Stationary Shelving. A contractor furnishes and installs moveable storage systems and stationary shelving for a lump-sum price. The items are purchased from an out-of-state manufacturer, are shipped disassembled, and must be assembled on site before they can be installed. The moveable storage system is mounted on rails which are permanently attached to the floor. The installation of the stationary shelving includes seismic bracing which is attached to the concrete by bolts and fastened to the wall.
Whether the storage system or stationary shelving is "materials" or "fixtures" depends on whether the test set forth in Regulation 1521(c)(2) is met. The act of attaching a piece of the cabinet is "jobsite fabrication" (i.e., part of the cost prior to installation onto real property) unless that piece becomes an improvement to real property by virtue of that attachment. Whether the rails are part of the cabinet and thus included in the calculation set forth in Regulation 1521(c)(2) depends on the facts. If the rails are used only on moveable systems, the rails are not regarded as part of the fixture for purposes of the calculation. The rails are "materials." If the rails also are part of a stationary system, it is possible that they are part of the cabinet. This would be dependent on the actual facts.
In summary, the calculation of whether a cabinet is a fixture is performed on an individual basis. Thus, one cabinet installed under one contract may be a "fixture" while a substantially similar cabinet furnished and installed under the same contract may constitute "materials." The cost of furnishing and installing materials which do not become part of the cabinet is not part of the calculation as to that cabinet. All labor is part of pre-installation labor except for that labor to physically attach property to cause it to become an improvement to real property by virtue of that attachment, and labor performed on property already an improvement to real property. 2/8/95; 8/2/95.