Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
305.0029 Sales of Housing Units. Corporation A, a manufacturer of mobilehomes and factory-built housing, sold 38 mobilehomes to Corporation B for a residential project on an Indian reservation in June of 1987. The units were to be used as housing for an Indian Housing Authority (Housing Authority). Corporation B is not a licensed mobilehome dealer. An agreement dated May 26, 1987 between Corporations A and B, the Housing Authority, and a Mortgage Corporation indicated that Corporation B contracted with the Housing Authority to complete several residential developments. The evidence supports a finding that once Corporation B had contracted with the Housing Authority to build the residential units and secured its financing, Corporation B contracted with Corporation A to manufacture the mobilehomes. Corporation A believed that the sale was to the Housing Authority and that Corporation B was merely an agent for the Housing Authority. Thus, the sale was an exempt sale to an Indian organization. In support of this belief, Corporation A submitted a letter dated April 11, 1988, from a development officer for the Housing Authority stating that Corporation B was its agent and also an exemption certificate from the Executive Director of the Housing Authority dated July 1, 1988 stating that the Housing Authority purchased the units from Corporation A through its agent, Corporation B. Alternatively, Corporation A also believed that the units were factory-built housing and that if taxable at all, the units should be taxed at 40% of the sales price to the consumer.
There is no evidence of an agency relationship between Corporation B and the Housing Authority other than the statements made by representatives of the Housing Authority a full year after the sales took place which is not timely and must be considered as self-serving evidence. The language in the agreement of May 26, 1987 clearly indicates that Corporation B had contracts with the Housing Authority to complete a residential neighborhood. It is concluded that B was not an agent of the Housing Authority but merely a developer. There is no evidence that Corporation A's customer was the Housing Authority. Rather Corporation A's invoices clearly stated that Corporation B was the customer and that the terms were "fob factory."
The statutory term "factory-built housing" does not include mobilehomes. There was no evidence that the units had the approval of the Department of Housing and Community Development (Department) or the local building authority. There were no insignias of approval or other evidence that the units were approved by the Department or local building authority.
Additionally, Corporation A had charged tax on 75% of the sales price of other units sold to Corporation B which were for use outside the reservation. While this is not conclusive evidence that the units in question were mobilehomes, it is evidence that Corporation B was buying mobilehomes for its project. The total evidence indicates the units were mobilehomes. 10/19/90.