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 190.2844


190.2844 Fixed Price Contracts. A contract provides under a termination clause that if the contractor and the owner have the right to terminate the general contract, then the contractor can terminate the contract with the subcontractor.

If the subcontract incorporates by reference the terms of the general contract and if the general contract provides the parties the right to cancel the contract unconditionally, neither contract qualifies as being for a fixed price.

When dealing with the earthquake tax, if the prime contract qualifies as a fixed price contract, the subcontract also qualifies. However, this rule does not apply to the exemption for fixed price contracts under district taxes. In that case, each contract must qualify on its own. 7/10/91.