| (2) Items other than air conditioners and refrigerators.
Delivery charges that are billed by the seller to the purchaser are
exempt if the product sold is exempt. For example, delivery fees billed
in connection with the sale of a qualifying energy-efficient dishwasher
during the exemption period are exempt.
(3) "Per item" delivery fees. Delivery charges billed
on a "per item" basis must be properly allocated when a delivery to
the same person contains both exempt and taxable items. Except as
provided in paragraph (4) of this subsection, if multiple items are
shipped on a single invoice, the delivery charges must be allocated
to each item ordered and separately identified on the invoice. For
example, assume that a person purchases a qualifying clothes washer
tax-free during the exemption period. The same person also purchases
a clothes dryer, which does not qualify for the exemption. The retailer
charges the person an additional fee of $25 per appliance for delivery.
The $25 delivery fee connected to the delivery of the qualifying clothes
washer is exempt from sales tax, but the $25 fee connected to the
delivery of the clothes dryer is subject to tax.
(4) "Flat rate" delivery fees. If the delivery charge
is a flat rate per delivery address, and the amount charged is the
same regardless of how many items are included in the delivery, for
purposes of the exemption, the total charge may be attributed to one
of the items in the delivery rather than proportionately allocated
between the items. The delivery fee can be allocated to either an
exempt qualifying product or a taxable product. The following examples
illustrate the way these charges should be handled.
(A) Delivery fee allocated to exempt item. Assume a
seller charges a flat fee of $50 per customer address for delivery
regardless of the number of items delivered to that address and during
the exemption period, a person purchases an Energy Star qualified
refrigerator priced at $1,900, a taxable stove and a taxable microwave.
The seller may attribute the $50 delivery charge to the sale of the
refrigerator bringing the sales price of the refrigerator to $1,950.
The refrigerator sales price does not exceed $2,000, so it still qualifies
for the exemption. The seller does not have to allocate the delivery
charge between the refrigerator, stove and microwave. The sales invoice
must clearly identify that the delivery charge was attributed to the
exempt item and must separately state the tax due on the taxable items.
(B) Delivery fee allocated to taxable item. Assume
a seller charges a flat fee of $50 per customer address for delivery
regardless of the number of items delivered to that address and during
the exemption period, a person purchases an Energy Star qualified
refrigerator priced at $1,975 and a taxable stove. The seller may
attribute the entire $50 delivery charge to the sale of the stove,
thus allowing the total sales price of the refrigerator to remain
$1,975. Since the refrigerator sales price does not exceed $2,000
it still qualifies for the exemption. The seller does not have to
allocate the delivery charge between the refrigerator and stove. The
sales invoice must clearly identify that the delivery charge was attributed
to the taxable stove and must separately state the tax due on the
taxable item.
(f) Installation charges. A charge for the installation
of a qualifying product purchased during the exemption period qualifies
for exemption only if the item remains tangible personal property
after installation. If the product becomes real property after installation,
the charge for installation labor may be taxable or nontaxable depending
on whether the product is installed in residential or nonresidential
property or as part of a new construction contract.
(1) Tangible personal property. Products that are free-standing
or mobile, such as clothes washers, dehumidifiers, refrigerators,
portable dishwashers and window or room air conditioning units are
tangible personal property. If qualifying tangible personal property
retains its identity as tangible personal property after installation,
the installation charge billed by the seller of the item becomes part
of the sales price of the item. As part of the sales price, an installation
charge billed by the seller qualifies for the exemption, even if the
installation is performed after the exemption period. If however,
the charge for installation of an Energy Star qualified refrigerator,
which remains tangible personal property after installation, causes
the total sales price to exceed $2,000, the entire charge of the refrigerator,
delivery and installation, is taxable.
(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 Cont'd... |
