Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
435.0000 PRODUCING, FABRICATING AND PROCESSING PROPERTY FURNISHED BY CONSUMERS—GENERAL RULES—Regulation 1526
(a) ASSEMBLY, DISASSEMBLY AND REASSEMBLY
435.0145 Shelving. A corporation is engaged in the furnishing and installation of market equipment, including meat monorail systems, adjustable shelving, and overhead conveying systems. The item in question involves labor charges in connection with shelving delivered to the buyer in a knocked-down condition (steel pipe uprights, brackets, shelve frames, and steel wire trays). The questioned shelving generally is furnished in conjunction with the sales and installations of other food handling equipment under a single order. The corporation states that, because the individual components of the shelving are treated with a hot galvanized dip, factory assembly is necessary to make sure the components fit, since galvanizing sometimes causes warping of the frames or other undesirable effects. The shelving is then disassembled and shipped to the jobsite and reassembled. After delivery to the customer's place of business, the shelving is assembled prior to its being placed in its final location. The shelving generally is free standing.
In this case, the shelving was reassembled at the jobsite prior to being placed in its final location as a free standing unit (without attachment to the realty). Under such circumstances, the assembly labor does not qualify as nontaxable installation labor. The corporation cited Annotation 435.0140 as support for its belief that this labor is not taxable. The corporation's method of operation is not in conformance with the requirements for nontaxable as set out in that annotation. The charges for labor are not separately stated, there is no showing that title to the property passes to the buyer prior to the assembly, and reassembly is a contractual obligation of the seller under the agreement to furnish and install. 4/28/76.