Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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C

190.0000 CONSTRUCTION CONTRACTORS—Regulation 1521

Annotation 190.2480

(c) MEASURE OF TAX

190.2480 Fire and Security Alarm Systems. A taxpayer contracts to furnish, install, and monitor fire and security alarm systems. The contract is for 36 months and the customer pays a monthly monitoring fee. In addition, the customer pays the taxpayer an amount for the alarm system itself. Sometimes this amount is the taxpayer's cost for the alarm system, or it may be marked up. At the end of the 36 month contract the customer receives a certificate of ownership of the alarm system.

Under these facts, the taxpayer is a construction contractor who furnishes and installs alarm system fixtures. Although title to the alarm system is held by the contractor as security for the payment of the contract amount, the transfer of possession of the alarm system to the customer upon installation is a sale of tangible personal property within the meaning of section 6006(a) and (e).

Since the alarm system is a fixture, the contractor is the retailer of that alarm system. Therefore, the contractor is liable for sales tax measured by the sales price of the alarm system fixture which is stated in the contract with the customer. If no sales price is stated in the contract, the sales price is deemed to be the cost price of the fixture to the contractor. If the contractor purchases the fixture in a completed condition, the cost price is deemed to be the sales price of the fixture to the contractor. If the contractor has not purchased the fixture in a completed condition, the cost price is determined as set forth in Regulation 1521(b)(2)(B)2.b.). 2/27/95.