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Ezel / Tax Rulings / CT
CT Ruling 91-6 Sales and Use Taxes 1991-02-22

Is on-site labor to relocate and install production machinery at a Connecticut customer's plant subject to sales tax?

Short answer: No, if the installation labor is separately stated on the customer's bill. The trucking, hauling, crane, and rigging company removed and relocated floor lags, installed production machines on them, and sometimes welded stairs and catwalks attached to the machines that did not become building components. DRS treated this as nontaxable installation of tangible personal property and not as taxable service to commercial or industrial real property. The installer still owed use tax as consumer of materials used in the work.

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This page answers the general question as of 1991. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1991
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Ruling of the Connecticut Department of Revenue Services (DRS), typically issued to a specific taxpayer in response to that taxpayer's request and based on the specific facts presented and the Connecticut tax law in effect when it was issued. DRS may later declare a Ruling obsolete or supersede it by a subsequent Ruling, Policy Statement, or Announcement, so a taxpayer with different facts should not assume it still applies. Taxpayer-identifying details are redacted. Connecticut imposes its sales and use tax solely at the state level: there are no local or municipal sales taxes. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A trucking, hauling, crane, and rigging company sometimes installed production machinery at customer plants. Its work could include removing floor lags from one concrete-floor location and placing them elsewhere, mounting the machinery on those lags, and welding stairs or catwalks attached to the machines. The stairs and catwalks did not become structural parts of the building, and the company did no electrical or plumbing work.

DRS ruled that this on-site labor was nontaxable installation labor for tangible personal property, as long as the labor charge was separately stated on the customer's bill. It was also not treated as a taxable service to commercial, industrial, or income-producing real property because the work installed production machinery.

The company was still the consumer of materials used in the installation and had to pay use tax on those materials. Conn. Agencies Regs. § 12-426-26(d), quoted in the ruling, provided that services to machinery and production equipment were not taxable even if the machinery or equipment was considered a fixture under Connecticut real-property law.

What this means for you

Separately state installation labor

The ruling's nontaxable result expressly depended on listing the labor separately on the customer's bill.

Production machinery remained tangible personal property for this service analysis

Installing the machines, their attached stairs, and catwalks was not reclassified as taxable real-property service on these facts.

Materials remain taxable to the installer

Even where labor is not taxed, the installer owes use tax as the consumer of materials used in performing the installation.

Common questions

Was the machinery-installation labor taxable? No, provided it was separately stated on the bill.

Did attaching stairs and catwalks make the work a real-property service? Not here. They attached to the production machines and did not become structural building components.

Who paid tax on installation materials? The installation company owed use tax as the consumer of those materials.

Citations and references

  • Conn. Agencies Regs. § 12-426-26(d) -- services to machinery and production equipment are not taxable even when the equipment is a fixture under real-property law.

Source

Original ruling text

Ruling 91-6, Installation of Tangible Personal Property

Ruling 91-6

Installation of Tangible Personal Property

FACTS:

In the course of its trucking and hauling services and crane and rigging services, Company is sometimes required to install certain production machinery at the customer's plant. Company may remove the lags from a concrete floor in a customer's plant and relocate them to another location. Company installs the machinery onto the lag. In connection with the installation, Company may have to weld stairs and catwalks which are attached to the production machines. These stairs and catwalks do not become structural components of the building. Company does no electrical or plumbing work.

ISSUE:

Whether the above-described installation services rendered by Company are subject to sales and use tax.

RULING:

The Department considers the on-site labor described herein to be installation labor to tangible personal property and, therefore, not subject to sales tax so long as it is separately stated on Company's bill to its customer. Company must pay use tax as a consumer of the materials used in the installation of the machinery. Such installation should also not be considered as a service to commercial, industrial or income producing property since it is installation of production machinery. Regulation Section 12-426-26(d) provides in pertinent part:

Services rendered to machinery and production equipment are not taxable even though such machinery or equipment is considered to be a fixture under Connecticut real property law.

LEGAL DIVISION

February 22, 1991

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