Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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S

515.0000 SERVICE ENTERPRISES GENERALLY—Regulation 1501

Annotation 515.0456

(c) ORIGINAL MANUSCRIPTS, PLANS, ETC.

515.0456 Engineering, Design, etc. Company A contracts with Company B for Company B to provide certain engineering, design, procurement, and to furnish necessary drawings, specifications, maintenance manuals, and technical support for proper construction, operation, and maintenance for modification of certain equipment. Company B will also provide technical and pricing information for preparation of cost estimates for construction of NOx reduction/control facility. Company B also will be procuring property for Company A.

Drawings, specifications, and other written materials are created and provided by Company B based on engineering and technical expertise. Company B does not supply extra copies of these manuals. The furnishing of the technical drawings is incidentally transferred as part of engineering services and is not a retail sale of tangible personal property.

With respect to the procurement of property, in order to qualify as an agent for Company A in purchasing property and not as a seller of the property to Company A, Company B should have written evidence of agency status, must clearly disclose to the supplier that it acts as an agent for Company A when making the purchases, and the price billed to Company A must be the same amount paid to the supplier.

The contract provides that Company A will pay the actual costs of such property procured by Company B and that the other charges paid by Company A attributable to such procurement would be agency fees. Assuming that Company B discloses to the suppliers that it is acting as an agent for Company A when purchasing the property, Company B is purchasing the property as agent for Company A.

If Company B provides fabrication of tangible personal property, that fabrication would be regarded as a sale and the gross receipts attributable to that sale would be subject to sales tax. 9/19/90.