NE 01-94-2 Sales and Use Tax 1994-10-17

Must a company that provides barricades, lights, and arrow boards to Nebraska contractors collect sales tax on the charge?

Short answer: Providing this traffic-control equipment to contractors is a taxable lease, and tax applies to the whole charge. Under Revenue Ruling 1-94-2 (sales and use tax), persons providing barricades, high intensity lights, and arrow boards to contractors are lessors and must collect sales tax on the entire amount charged. Contractors need these items on the job site to meet governmental or private contract specifications for worker safety and traffic control. Per Neb. Rev. Stat. §77-2702.12, the rental or lease price includes the total amount for which the property is rented or leased -- including any services included in the lease to place, move, clean, maintain, repair, and remove the equipment -- and such leases are not treated as the lease of equipment with an operator. The tax applies to all leases to contractors whether the project owner is a governmental or private entity. This ruling followed Todco Barricade Company v. Department of Revenue, Docket 505 Page 256, Lancaster District Court (July 22, 1994). When bidding, lessors need not separately state sales tax if they indicate the bid price includes it, but on the actual billing the sales tax must be separately stated.

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This page answers the general question as of 1994. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your 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

If your business supplies barricades, high intensity lights, and arrow boards to construction contractors, Nebraska treats you as a lessor — and you must collect sales tax on the entire amount you charge.

Why contractors use them. Contractors must have these items on the job site to comply with governmental or private contract specifications — to protect workers and provide traffic control.

The holding and the statute. Persons who provide barricades, high intensity lights, and arrow boards are leasing them and must collect sales tax on the leases. Under Neb. Rev. Stat. §77-2702.12, the rental or lease price includes the total amount for which the property is rented or leased. That total includes any services included in the lease to place, move, clean, maintain, repair, and remove the equipment. Bundling those services does not turn the arrangement into the (differently treated) lease of equipment with an operator — it's still a taxable lease of the equipment.

Government or private — same result. The tax applies to all leases to contractors, whether the project owner is a governmental or a private entity.

Where the rule came from. This ruling resulted from Todco Barricade Company v. Department of Revenue, Docket 505 Page 256, Lancaster District Court (July 22, 1994).

Bidding vs. billing. When bidding a job, the potential lessor need not separately state sales tax, provided the bid indicates the bid price includes sales tax. But when the billing is made, the sales tax must be separately stated.

What this means for you

A traffic-control equipment supplier

Charge and collect sales tax on the full amount you bill contractors for barricades, lights, and arrow boards — including your charges to place, move, clean, maintain, repair, and remove them. Don't treat the bundled services as untaxed, and don't assume the "equipment with an operator" exception applies. On bids you can fold the tax in (just say the price includes sales tax), but your invoices must break the tax out separately.

A contractor renting this equipment

Expect sales tax on the whole rental charge, whether your project is public or private. The tax isn't limited to the bare equipment — it covers the associated placement and maintenance services too.

Common questions

Q: Is supplying barricades and arrow boards to a contractor a taxable transaction?
A: Yes. The supplier is a lessor and must collect sales tax on the entire amount charged.

Q: Are the setup, maintenance, and removal services taxed too?
A: Yes. Under §77-2702.12 the lease price includes the total charged, including services to place, move, clean, maintain, repair, and remove the equipment.

Q: Does it matter if the project is a government job?
A: No. The tax applies to all leases to contractors, whether the project owner is governmental or private.

Q: Do I have to show the tax separately?
A: Not on the bid (you may state the bid price includes sales tax), but yes on the actual billing — the sales tax must be separately stated there.

Citations and references

Neb. Rev. Stat. §77-2702.12 — the rental or lease price includes the total amount for which the property is rented or leased, including bundled placement and maintenance services.
Todco Barricade Company v. Department of Revenue, Docket 505 Page 256, Lancaster District Court (July 22, 1994) — the case that produced this ruling.

Source

Original ruling text

department
of revenue

| Pissereses Revenue Ruling 1-94-2

Sales and Use Tax - Barricades, High Intensity Lights, and Arrow
Boards Provided to Contractors. PERSONS PROVIDING BARRICADES, HIGH
INTENSITY LIGHTS, AND ARROW BOARDS TO CONTRACTORS ARE LESSORS AND
ARE REQUIRED TO COLLECT SALES TAX ON THE ENTIRE AMOUNT CHARGED.

Advice has been requested as to whether persons providing
barricades, high intensity lights, and arrow boards to contractors
are required to collect sales tax.

Contractors are required to have on the job site barricades, high
intensity lights, and arrow boards to comply with governmental or
private contract specifications to protect their workers and to
provide traffic control.

Persons who provide barricades, high intensity lights, and arrow

boards are leasing those items and are required to collect sales
tax on their leases. Neb. Rev. Stat. §77-2702.12 states that the
rental or lease price shall include the total amount for which
property is rented or leased. This includes any services included
in the lease to place, move, clean, maintain, repair and remove the
barricades, high intensity lights, and arrow boards. Additionally,
such leases that include services do not constitute the lease of
equipment with an operator. The tax applies to all leases to
contractors whether the project owner is a governmental or private
entity. This ruling is a result of Todco Barricade Company v.
Department of Revenue, Docket 505 Page 256 Lanc. Dist. Ct.
(July 22, 1994).

While bidding these jobs, it is not necessary for the potential
lessors to separately state sales tax provided they indicate that
the bid price includes sales tax. However, when the billing is
made, sales tax must be separately stated.

Berri Bs
State Tax Co

October /7 , 1994

sioner

are G&S printed on recycled paper

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