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PUBLICATION 146 | APRIL 2014 - page 20 / 38





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This section describes how tax applies to sales to and by construction contractors, in situations involving Indian cus- tomers and construction contracts for work in Indian country. For detailed information on applying tax to sales of construction materials, fixtures and supplies, please see publication 9, Construction and Building Contractors. You may also want to refer to Regulation 1616, Federal Areas, and Regulation 1521, Construction Contractors. You may obtain copies of these from our website at www.boe.ca.gov or by contacting our Taxpayer Information Section.

Construction activity outside Indian country

There are no special sales or use tax exemptions for construction work done for an Indian customer outside Indian country. Tax applies to your sales in the same manner as other construction contracts.

Materials vs. ๎‘xtures

Generally, a construction contractor is a consumer of materials and a retailer of fixtures that are furnished and installed in the performance of a construction contract. Due to the different application of tax when a contractor is a consumer rather than a retailer, it is very important to ascertain whether items that are being furnished and installed in the performance of a construction contract are materials or fixtures.

Materials are construction materials, components, and other tangible personal property incorporated into, attached to, or affixed to real property by contractors in the performance of a construction contract, and which, when com- bined with other tangible personal property, lose their identity to become an integral and inseparable part of the real property. Examples of items typically regarded as materials include concrete, doors, electric wiring, lumber, flooring, roofing, windows, and paint.

Fixtures are items that are accessory to a building or other structure. Fixtures do not lose their separate identity as accessories when installed. Examples of fixtures include signs, heating and air conditioning units, furnaces, plumb- ing fixtures, lighting fixtures, shutters, and blinds.

For more information on typical items regarded as materials or fixtures, see Appendix A and Appendix B of

Regulation 1521, Construction Contractors.

Sales to construction contractors (by “o๎’-reservation” retailers) Sales to Indian construction contractors

Materials Sales tax does not apply to your sales of materials to Indian construction contractors (construction contractors that are Indians) when you deliver the materials in Indian country, and ownership transfers to the Indian construction contractor in Indian country. Tax does apply if materials are delivered to Indian construction contractors at any point outside Indian country. Be sure to read the information on documentation and transfer of ownership in Documenting Exempt Transactions.

Fixtures Sales tax does not apply to sales of fixtures furnished and installed by Indian construction contractors in Indian country. Therefore, when you sell fixtures to an Indian construction contractor, you should obtain a completed and timely California resale certificate from the Indian contractor. In the event the purchasing Indian construction contractor does not have a California seller’s permit, the resale certificate must include sufficient information as to why the Indian construction contractor is not required to hold a California seller’s permit, in lieu of a seller’s permit number. Please refer to publication 103, Sales for Resale, for additional information.




APRIL 2014

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