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 190.2595


190.2595 Windows Furnished and Installed by Subcontractor. A prime contractor contracts with its customers to furnish and install insulated windows. Taxpayer manufacturers such windows and pursuant to subcontracts with the prime contractor, furnishes and installs them. The subcontractor states a separate charge for materials and for labor. An amount is also added as "sales tax" on the charge for materials.

Windows are regarded as materials and a construction contractor is generally the consumer (as opposed to a retailer) of materials which the contractor furnishes and installs in the performance of a construction contract. Tax applies to the sale to, or the use by, the contractor of those materials. However, in the instance of "time and material contracts," if the contractor bills its customer an amount for "sales tax" computed upon its marked up billing for materials, the contractor is presumed to be the retailer of the materials and would owe sales tax on its selling price of the materials. The contracts between the prime contractor and the subcontractor (taxpayer) are time and material contracts. Since the taxpayer bills the prime contractor for "tax" computed upon its charge for materials, the taxpayer is presumed to be the retailer of the materials. As such, sales tax applies to the taxpayer's gross receipts from the sales of the materials to the prime contractor. 3/24/97.