Service Provider Installing Property is Construction Contractor in Illinois

A service provider that installs racking systems for customers is considered a construction contractor who must pay Illinois use tax on its purchases because the racking systems are materials that are permanently affixed to real estate. Even though there were contradictory letter rulings on similar facts, the Department ruled that racking systems that are bolted to the floor, intended for removal within a few years and attached in such a manner that there is not permanent damage to the real property are deemed permanently attached and the installer is deemed a contractor. Tangible personal property that a construction contractor purchases that will be permanently affixed to or incorporated into real property is subject to use tax. (ST 13-0002-PLR, Illinois Department of Revenue, July 31, 2013)

Posted on April 11, 2014