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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3TAX ADMINISTRATION
SUBCHAPTER OSTATE AND LOCAL SALES AND USE TAXES
RULE §3.369Sales Tax Holiday--Certain Energy Star Products, Certain Water-Conserving Products, and WaterSense Products

  (2) Improvements to real property. Items such as programmable thermostats, central air conditioning units, ceiling fans and built-in refrigerators and dishwashers that are plumbed, wired or otherwise permanently attached to a building structure are improvements to real property. For items that become improvements to real property, the taxability of the installation labor is determined by the type of jobsite: residential, new construction or nonresidential repair or remodeling.

    (A) Residential and new construction. No tax is due on charges for labor to install items such as ceiling fans, programmable thermostats or central air conditioning units in residential property or during a new construction project. See §3.291 of this title (relating to Contractors).

    (B) Nonresidential repair and remodeling. Nonresidential repair and remodeling is a taxable service. Therefore, tax is due on charges for labor to install ceiling fans, built-in appliances, programmable thermostats and central air conditioning units in existing nonresidential real property, regardless of when the installation is performed. Charges for installation labor performed on existing nonresidential real property should be separately stated on the invoice from the sales price of qualifying energy-efficient or WaterSense products. Separately stated charges for products that may conserve water but that are not water-conserving products because they are installed in nonresidential real property are taxable. A lump sum charge for the purchase of a qualifying product and installation labor is subject to tax as the purchase of nonresidential repair and remodeling. See §3.357 of this title (relating to Nonresidential Real Property Repair, Remodeling, and Restoration; Real Property Maintenance).

(g) Purchases by real estate developers, dealers, service providers and contractors. Real estate developers, dealers, service providers and contractors may purchase qualifying products tax-free during the sales tax holiday as discussed in this subsection.

  (1) An exemption or resale certificate is not required for purchases of energy-efficient or WaterSense products.

  (2) A resale certificate must be provided for purchases of water-conserving products that will be subsequently resold to customers or incorporated into customers' real property under a separated contract.

  (3) An exemption certificate or resale certificate may not be provided for purchases of products that may conserve water but will be incorporated into real property under a lump-sum contract.

  (4) There is no limit to the number of qualifying products a person may purchase tax-free during the exemption period.

  (5) Held in inventory. Qualifying products purchased tax-free during the exemption period may be held in inventory until ready for use as discussed in this subsection.

    (A) No use tax is due if an energy-efficient product or WaterSense product purchased tax free during the exemption period by a contractor, developer, etc., is subsequently incorporated into the realty of a contractor's customer under a lump sum contract for new construction or residential repair and remodeling. See §3.291 of this title. Use tax is due on products that may conserve water but do not meet the definition of water-conserving products provided in subsection (a)(7) of this section because the products were incorporated into real property under a lump sum contract.

    (B) Sales tax is due on sales of energy-efficient or WaterSense products transferred to customers as part of a nonresidential repair and remodeling contract preformed after the exemption period. Nonresidential repair and remodeling service providers are responsible for collecting sales tax from customers on sales of energy-efficient or WaterSense products under a separated contract or under a lump sum contract for nonresidential repair and remodeling, unless the transaction (the sale of the energy-efficient or WaterSense product) between the customer and service provider, dealer or contractor occurs during the exemption period under a separated contract. See §3.357 of this title.

(h) Discounts and coupons. An Energy Star qualified air conditioner must be priced at $6,000 or less in order to qualify for the exemption. An Energy Star qualified refrigerator must be priced at $2,000 or less to qualify for the exemption. A seller may offer a discount or a coupon that reduces the sales price of an Energy Star qualified air conditioner or refrigerator. A discount or a coupon affects the application of the exemption as explained in paragraphs (1) and (2) of this subsection. The total sales price of the product includes delivery and installation charges as explained in subsections (e) and (f) of this section. See §3.301 of this title.

  (1) Discounts. If a discount reduces the sales price of an Energy Star qualified air conditioner to $6,000 or less, or reduces the sales price of an Energy Star qualified refrigerator to $2,000 or less, the air conditioner or refrigerator qualifies for the exemption under this section. For example, a person buys an Energy Star qualified free-standing refrigerator that has a sales price of $2,050, including shipping, handling and installation of tangible personal property, from a seller who offers a 10% discount. After application of the 10% discount, the final sales price of the refrigerator is $1,845. The refrigerator is exempt because its sales price does not exceed $2,000.

  (2) Coupons. When sellers accept a manufacture's or other coupon as a part of the sales price of any taxable item, the value of the coupon reduces the sales price, the same as a cash discount, regardless of whether the retailer is reimbursed for the amount that the coupon represents. Therefore, a coupon can be used to reduce the sales price of an Energy Star qualified air conditioner to $6,000 or less, or to reduce the sales price of an Energy Star qualified refrigerator to $2,000 or less. The item then qualifies for exemption under this section. For example, a person buys an Energy Star qualified free-standing refrigerator that has a sales price of $2,050, including shipping, handling and installation of tangible personal property, with a coupon worth $100. After application of the $100 coupon, the sales price of the refrigerator is $1,950. The refrigerator is exempt because its sales price does not exceed $2,000.

(i) Rebates.

  (1) Rebates given at the time of sale. Rebates provided by a seller are cash discounts when given at the time of sale and as such are excludable from the tax base. The rebate, like a discount when taken at the time of the sale, is a reduction in the amount subject to tax.

  (2) Rebates that occur after the sale. Rebates that are paid to a purchaser after the exemption period do not affect the sales price of an item purchased for purposes of determining whether an item qualifies for exemption under this section. The full amount of the sales price, before the rebate, is used to determine whether the exemption applies. For example, if a person purchases an Energy Star qualified air conditioner for $6,050 and receives a $300 mail-in rebate from the manufacturer, the seller must collect tax on the $6,050 sales price of the air conditioner.

(j) Layaway sales and purchases by means other than in person.

  (1) the sale of an energy-efficient product, WaterSense product, or water-conserving product under a layaway plan or purchased by mail, telephone, email, internet, custom order, or any other means other than in person qualifies for exemption when:

    (A) the purchaser places the item on layaway during the exemption period and the seller accepts the order for immediate delivery upon full payment, even if delivery is made after the exemption period;

    (B) the purchaser places the order and the seller accepts the order during the exemption period for immediate shipment, even if delivery is made after the exemption period; or

    (C) final payment on a layaway order is made by, and the merchandise is given to, the purchaser during the exemption period.

  (2) For purposes of this subsection, the seller accepts an order when the seller has taken action to fill the order for immediate shipment. Actions to fill an order include placement of an "in date" stamp on a mail order, or assignment of an "order number" to a telephone order. An order is for immediate shipment notwithstanding that the shipment may be delayed because of a backlog of orders or because stock is currently unavailable to, or on back order by, the seller.

(k) Rain checks. Qualifying products that are purchased during the exemption period with use of a rain check qualify for the exemption regardless of when the rain check was issued. However, issuance of a rain check during the exemption period will not cause the purchase of a qualifying product to be exempt if the item is actually purchased after the exemption period.

(l) Exchanges.

Cont'd...

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