Tax Type
Property Tax
Retail Sales and Use Tax
Description
Tangible personal property defined; Pit scales; Contractor with respect to real property
Topic
Property Subject to Tax
Date Issued
09-16-1994
September 16, 1994
Re: Request for Ruling: Retail Sales and Use Tax
Dear**************
This will reply to your letter of August 12, 1994 in which you seek clarification of Public Document 94-154 (5/13/94) concerning the application of the tax to the sale and installation of pit scales.
FACTS
********(the Taxpayer) is engaged in the manufacture, sale and installation of scales. In Public Document 93-154 I determined that in some instances a scale dealer may install a scale which becomes real property upon installation. In such instances the dealer is acting as a real property contractor and is therefore required to accrue and pay the tax to the department on the cost price of the scale.
You point out that pit scales, which become real property upon installation, come with an instrument which enables the user to read the weight of the object being weighed. This instrument is attached to the scale by a wire, and I understand that it is often located away from the scale such as in a building where the scale operator is stationed. You inquire if this reading instrument is deemed real property upon installation or if it remains tangible personal property.
DETERMINATION
It clearly appears that the reading instrument is a component part of the scale. Accordingly, when sold and installed under the same contract with the pit scale, the reading instrument and all other component parts are deemed to be the sale of property which becomes realty upon installation. Thus, the Taxpayer would accrue the tax on the cost price of all property supplied under contract when selling and installing a pit scale.
However, when the reading instrument is not sold in connection with a real property contract, and further provided that the reading instrument is not itself permanently attached to realty, it is the sale of tangible personal property. Such instances include the sale of a replacement instrument separate and apart from the sale and installation of the pit scale. In such instances the Taxpayer is required to charge and collect the tax or take an exemption certificate from the customer (i.e., a sale to a government entity).
I trust that this has addressed your concerns, but please contact the department if you need additional information.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/8389I
Rulings of the Tax Commissioner