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
(c) MISCELLANEOUS OPERATIONS
435.1363.200 Regrooving Pipe. A construction contractor purchased new pipe with grooves. The grooves were cut off by the purchaser because the grooves did not meet the specifications of the pipe joints. The cut pipe was then sent to a pipe servicing company to be regrooved.
The regrooving services are considered to be "fabrication" within the meaning of Regulation 1526. Such services are " . . . . step(s) in a process . . . resulting in the creation or production of tangible personal property." The property ultimately being bought by the contractor consists of the regrooved pipes. The services rendered by the pipe service company are merely steps in the process of creating that property and the charge for the services of regrooving is subject to sales tax. 1/24/92.