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Business Taxes Law Guide—Revision 2024

BTLG Table of Contents > Sales and Use Tax Annotations > C > 190.0000 Construction Contractors > Annotation 190.0270

Sales and Use Tax Annotations


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C

190.0000 Construction Contractors—Regulation 1521

Annotation 190.0270

(a) In General—Activities Constituting Contracting or Making of Improvements

190.0270 Food Service Industry Contracts. Under Regulation 1521 a construction contractor is the consumer of materials that he furnishes and installs in the performance of lump sum contracts. He is the seller of machinery and equipment.

Materials are defined as items of tangible personal property that are incorporated into, attached to, or affixed to real property by contractors in the performance of a construction contract and which, when combined with other tangible personal property lose their identity and become an integral and inseparable part of the real property.

The construction contractor may not take a resale certificate for materials that he furnishes and installs. Tax applies to the sale price of the materials to him.

The following are some items which are usually considered to be materials when furnished and installed by a construction contractor in performing a contract for the food service industry:

  • Carpeting, including padding and trim when affixed to the real property by glue, nails, etc.
  • Doors
  • Ducts installed in walls, ceilings, and floors
  • Grab bars (for handicapped lavatories)
  • Millwork
  • Pass window frames and shelves
  • Wall corner pieces and wall caps
  • Wall covering materials (wallpaper, paneling, etc.)
  • Wall flashing
  • Wall mirrors

Fixtures are defined as including items which are accessory to a building or other structure and do not lose their identity as fixtures when installed. Some items may be either fixtures or machinery and equipment depending on the manner of installation. For example, a freestanding stove which is attached to an electric outlet or gas outlet would be machinery and equipment. On the other hand, a stove which is built into a fixture or which is attached to the real property by bolts, screws, etc., will be a fixture.

A construction contractor may not take a resale certificate for fixtures which he furnishes and installs. And there is one and only one exception: The contractor may take a resale certificate if he furnishes and installs the fixture for a person, other than the owner of the realty, who intends to lease the fixture in place as personal property and the lessor of the fixture is not also the lessor of the realty.

When a contractor installs fixtures under a lump sum contract, tax applies to the "cost price" of the fixture as explained in paragraph (b)(2)(B) of Regulation 1521.

The following items furnished and installed by contractors to the food service industry are generally classified as fixtures:

  • Bolt-down counter stool bases, with stools attached thereto
  • Bolt-down table bases with table tops affixed
  • Custom fabricated cash stands
  • Custom fabricated cocktail back bar superstructures
  • Custom fabricated cocktail back bars
  • Custom fabricated cocktail bars
  • Custom fabricated counters
  • Custom fabricated dishtable assemblies
  • Custom fabricated make-up tables
  • Custom fabricated pot racks
  • Custom fabricated scullery sink assemblies
  • Custom fabricated seating assemblies/booth units
  • Custom fabricated service stands
  • Custom fabricated serving counters
  • Custom fabricated soffits
  • Custom fabricated walk-in coolers and freezers that are affixed to the real estate, either through a fastening to a building wall or when the walls are imbedded or coved into the building surfaces
  • Dispensers for soap, towels, toilet tissue
  • Faucets
  • Freezers (remote)
  • Hoods
  • Lighting fixtures
  • Motors
  • Plumbing fixtures
  • Refrigeration compressors
  • Refrigerators (remote)
  • Safes, imbedded in concrete in the buildings
  • Water heaters (built into fixtures or into water systems)
  • Water softeners (built into fixtures or into water systems)

Fixtures also include the following items which are built into fixtures or otherwise built into the realty and which may not be removed without damage to the items or the realty:

  • Char-Broilers
  • Dish dispensers
  • Dishwashers that are built into a dishtable assembly
  • Disposals
  • Drink dispensers
  • Freezers
  • Griddles
  • Ice cream cabinets
  • Ovens
  • Refrigerators
  • Rollwarmers
  • Scrap chutes
  • Soda fountain systems
  • Soup warmers
  • Syrup rails

Machinery and equipment include property intended to be used in the production, manufacturing, or processing of tangible personal property or the performance of services which are not essential to the fixed works, building, or structure itself but which incidentally may on account of its nature be attached to the realty without losing its identity as a particular piece of machinery and equipment and which, if attached, is readily removable without damage to the unit or to the realty. The contractor furnishing and installing machinery and equipment may take a resale certificate with respect to these items from a person who intends to resell them as tangible personal property.

Tax applies to the price received for machinery and equipment as explained in paragraph (b)(2)(C) of Regulation 1521.

The following is a list of items which may be generally considered to be machinery and equipment when freestanding or when they are not firmly affixed to the building or built into it or another fixture and which may be readily removed without damage to the building, the unit, or other fixture:

  • Adding machines
  • Artifacts items
  • Bar stools
  • Beverage and juice dispensers
  • Bulletin boards
  • Can openers
  • Chairs
  • Char-Broilers
  • Chinaware, silverware, pots and pans, paper goods, culinary items
  • Coffee makers
  • File cabinets
  • Flight-type dishwashers
  • Floor racks
  • Griddles
  • Hot water hoses
  • Ice bins
  • Ice cream cabinets
  • Ice making machinery
  • Iced tea dispensers
  • Iced tea machines
  • Lockers
  • Microwave ovens (freestanding)
  • Milk dispensers
  • Mixers
  • Ovens
  • Portable bins and tables
  • Ranges
  • Reach-in freezers (self-contained)
  • Reach-in refrigerators (self-contained)
  • Roll covers
  • Safes
  • Salamanders
  • Scales
  • Shelving units
  • Silverware boxes
  • Slicers
  • Sofas with chairs
  • Table lamps
  • Tables
  • Time card racks
  • Time clocks
  • Toasters. 4/5/77.