Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2015
Sales and Use Tax Annotations
315.0000 INSTALLING, REPAIRING, RECONDITIONING IN GENERAL—Regulation 1546
(c) MISCELLANEOUS REPAIRS
315.0885 Titanium Nitride Coating. The titanium nitride coating of used cutting tools constitutes a repair operation and if a lump-sum charge is made for labor and materials and the retail value of the materials is 10 percent or less of the total charge, the repairer is the consumer of the coating material and tax applies to the purchase price of the property to the repairer. (Regulation 1546(b)(2).)
When a new tool is coated for a consumer, it constitutes a fabrication process and the total charge is subject to sales tax. (Section 6006(b).) The coating materials incorporated into the new tool may be purchased ex-tax by issuing a resale certificate or a tax paid purchases resold deduction may be taken for those material purchased tax paid and resold.
The coating of new items for a dealer who will resell the tool is also considered a sale even though the dealer furnishes the item. Since the coating is done for dealers who will resell the tools, the coating material may be purchased ex-tax for resale. ( Regulation 1525(b).) 5/5/88; 2/16/88.