Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660
(b) RENTAL RECEIPTS—ITEMS INCLUDED AND EXCLUDED
330.3538 Rentals of Sprinklers, Pipe, Pumps, and Related Accessories.
Taxpayer is a corporation engaged in the business of renting sprinklers, pipe, pumps and related accessories. The taxpayer also charges for installation, removal and delivery of these items. The taxpayer claimed that the installation charges were for field layout and connection and that services occurred after the rental period began. In addition, these services were strictly optional.
The charges for installation are specifically excluded from tax, whether performed before or after the lease term begins and whether the installation is mandatory or optional. (Section 6011 (c)(3).) The charge for the temporary field assembly of the sprinkler components does not constitute a sale of tangible personal property. There is no fabrication of components and the actual labor of assembling the sprinkler components does not constitute a step or process in the production of property.
The charge for delivery are subject to tax where the amounts are not separately stated and the evidence does not show that the delivery was performed after the lease began.
Since the return of the property to the taxpayer is an express condition of the contract, no portion of the charge for removal of the leased property is excludable from the measure of tax. The amount charged for this service is part of the rental receipts subject to tax. 4/26/90.