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 190.2320


190.2320 United States Contractors. An intrusion detection system furnished and installed under a contract with the U.S. Navy is properly classified as materials and fixtures rather than machinery and equipment.

The property in question included shielded copper wire with a vinyl or metal foil jacket, a decoupler and terminator attached to the cables to stop electronic signals in the cables (comparable to transformers), electrical switch gear and transceiver modules that send and receive FM signals akin to a component in a fire alarm system. None of the individual components of the system nor the completed system as a whole perform any of the functions of machinery and equipment listed in Regulation 1521(a)(6). In fact, they are more closely related to the items specified in that section as not being machinery and equipment. In addition, the property was installed into the realty and the manner of its annexation to the realty shows that, even if it could be removed, it was intended as a permanent part of the realty. Furthermore, the property was installed to serve a beneficial purpose for the host making that realty more suitable for its intended use as an airfield. As such, the property is consumed by the installing contractor and not resold to the Navy. 7/26/90.