No. 27066 (Amendment): R865-19S-51. Fabrication and Installation Labor in Connection With Retail Sales of Tangible Personal Property Pursuant to Utah Code Ann. Section 59-12-103

DAR File No.: 27066
Filed: 04/08/2004, 11:59
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

Section 59-12-103 indicates when labor and installation charges are taxable.

 

Summary of the rule or change:

The proposed amendment deletes language that currently appears in statute.

 

State statutory or constitutional authorization for this rule:

Section 59-12-103

 

Anticipated cost or savings to:

the state budget:

The current statutory treatment for taxation of labor and installation charges is a result of H.B. 51 (2002). (DAR NOTE: H.B. 51 is found at UT L 2002 Ch 117, and was effective July 1, 2002.)

 

local governments:

The current statutory treatment for taxation of labor and installation charges is a result of H.B. 51 (2002).

 

other persons:

The current statutory treatment for taxation of labor and installation charges is a result of H.B. 51 (2002).

 

Compliance costs for affected persons:

Generally, if the underlying property is exempt from sales tax, charges for repairs to the property are tax exempt.

 

Comments by the department head on the fiscal impact the rule may have on businesses:

None--The language deleted is unnecessary because sales tax statutes indicate when installations and repairs are taxable.

 

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Tax Commission
Auditing
210 N 1950 W
SALT LAKE CITY UT 84134

 

Direct questions regarding this rule to:

Cheryl Lee at the above address, by phone at 801-297-3900, by FAX at 801-297-3919, or by Internet E-mail at [e-mail]

 

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

06/01/2004

 

This rule may become effective on:

06/02/2004

 

Authorized by:

Pam Hendrickson, Commissioner

 

 

RULE TEXT

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-51. Fabrication and Installation Labor in Connection With Retail Sales of Tangible Personal Property Pursuant to Utah Code Ann. Section 59-12-103.

A. The amount charged for fabrication or installation which is part of the process of creating a finished article of tangible personal property must be included in the amount upon which tax is collected. This type of labor and service charge may not be deducted from the selling price used for taxation purposes even though billed separately to the consumer and regardless of whether the articles are commonly carried in stock or made up on special order.

B. Casting, forging, cutting, drilling, heat treating, surfacing, machining, constructing, and assembling are examples of steps in the process resulting in the creation or production of a finished article.

[C. Charges for labor to install personal property in connection with other personal property are taxable (see Rule R865-19S-78) whether material is furnished by seller or not.

D.]C. [Labor]Charges for labor to install tangible personal property to real property [is]are exempt[, whether] if the personal property becomes part of the realty[ or not]. See Rule R865-19S-58, dealing with improvements to or construction of real property, to determine the applicable tax on personal property which becomes a part of real property.

[E.]D. [Tangible]Sale of tangible personal property [which]that is attached to real property, but remains personal property, is subject to sales tax on the retail selling price of the personal property, [and installation charges are exempt if separately stated. If the retailer does not segregate the selling price and installation charges, the sales tax applies to the entire sales price, including installation charges]unless the tangible personal property attached to the real property is exempt from sales and use tax under Section 59-12-104.

[F.]E. This rule primarily covers manufacturing and assembling labor. Other rules deal with other types of labor and should be referred to whenever necessary.

 

KEY: charities, tax exemptions, religious activities, sales tax

[October 29, 2003]2004

Notice of Continuation April 5, 2002

59-12-103