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 190.2810


190.2810 Criteria for Fixed Price Contracts. A taxpayer who filed a claim for refund contends that the agreement at issue was a fixed price contract so that the tax should have been applied at the effective rate prior to July 15, 1991. In determining whether a contract, other than construction contracts (see 190.2835) or leases (see 330.1870), is a "fixed-price" contract, it must meet all of the following criteria:

(1) it must be binding prior to July 15, 1991;

(2) it must fix the amount of all costs at the outset; and

(3) it must include a provision which fixes the tax obligation on a tax-included basis or sets forth the rate of tax and does not provide for an increase in the amount of tax.

The agreement is dated February 7, 1992, but states that it "acknowledges the agreement between the parties as of June 25, 1990." The claim for refund states that the sale agreement at issue is dated September 27, 1990. The agreement states that the price is not fixed but may be adjusted. The agreement also provides that the buyer shall be responsible for all the taxes, including state sales and use taxes. Even if the agreement dated February 7, 1992 relates back to June 25, 1990, or September 27, 1990, it does not meet criteria 2 or 3. Therefore, the agreement at issue is not a fixed price contract. 4/20/93.