Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
515.0000 SERVICE ENTERPRISES GENERALLY—Regulation 1501
(c) ORIGINAL MANUSCRIPTS, PLANS, ETC.
515.0720 Separate Purchase Orders. When a contract to manufacture certain equipment is followed by two purchase orders, one for the equipment and the other for designs and drawings necessary to manufacture the equipment the full contract price must be included in gross receipts. The test is whether at the time of performing the engineering and design the person doing the work is under any obligation to deliver an end product. If he is, then the cost of engineering and design is not deductible from gross receipts. If he has no contract for an end product but is simply performing an engineering service not involving the production of any tangible personal property which is desired by the customer, then such charges can be regarded as service charges and not subject to tax. 1/22/58.