a) Definitions
1) "Construction Contractor." The word
"construction contractor" when used in this Subpart includes general
contractor, subcontractor and specialized contractor such as a landscape
contractor. "Contractor" means any person who is engaged in the occupation of
entering into and performing construction contracts for owners.
2) "Owner" means any person who enters into a
contract with a contractor relative to the construction of a
structure.
3) "Construct" means
build, erect, construct, reconstruct, install, plant, repair, renovate or
remodel.
4) "Structure" includes
any building, house, edifice, tunnel, sewer, highway, road, bridge or any other
type of structure, or any part thereof (including any system of plumbing,
heating, ventilating, refrigerating, air conditioning, or any part thereof), or
any other improvement to real estate.
5) "Materials" means all of the tangible
personal property, including fixtures, which enter into a structure or
otherwise become incorporated into real estate.
6) "Construction Contract" means a contract,
written or oral, to "construct" (as that term is defined in subsection (a)(3)
above), a "structure" (as that term is defined in subsection (a)(4), above) or
to otherwise incorporate tangible personal property into real estate.
7) "Real Estate Developer" means any person
engaged in the business of transferring title (legal or equitable) to real
estate to others. The term does not include an isolated or occasional sale of
real estate by a person not engaged in the business of selling real estate, and
the term does not include a person who acts merely as agent for a commission to
bring sellers and buyers of real estate together without ever actually taking
either the legal or the equitable title to the real estate.
b) Construction Contractors - When
Liable For Tax
1) Construction contractors
incur Retailers' Occupation Tax liability when they engage in selling any kind
of tangible personal property without installation to purchasers for use or
consumption.
2) A construction
contractor incurs Retailers' Occupation Tax liability when he sells furniture
and furnishings, curtains, drapes, floor covering (except when he cements or
otherwise permanently affixes the floor covering to a portion of the building),
trade fixtures and machinery (unless in the case of machinery Section
130.2115(b)
of this Part applies) to purchasers for use or consumption, with or without
installation by the seller, whether or not the seller furnishes and installs
such items as a part of a construction contract. The same is true where he
purchases and sells in finished form gas or electric stoves, refrigerators,
washing machines, portable ventilating units and other portable equipment of
this kind, which may be connected to and operated from a building's electrical,
plumbing or other specialized system, but which is not actually a part of any
such system and is considered to remain personal property when installed, even
if the contractor does install such equipment pursuant to a construction
contract.
3) For information
concerning the seller's taxability on receipts from installation charges where
the seller is taxable notwithstanding his installation of the item, see Section
130.450
of this Part.
4) If the seller is
taxable notwithstanding installation, but the sale and installation are made by
the seller pursuant to his performance of a construction contract, the seller's
receipts from that part of the transaction which actually comprises the
construction contract are not subject to the Retailers' Occupation Tax. In this
situation, if a separate charge is made for the tangible personal property as
to which the construction contractor is taxable, the value of such property for
purposes of computing the Retailers' Occupation Tax is the amount charged for
such property, but not less than the cost of such property to the construction
contractor. If no separate charge is made in this situation for the tangible
personal property as to which the construction contractor incurs Retailers'
Occupation Tax liability, the value of such property for computing the
Retailers' Occupation Tax is the cost of such property to the construction
contractor.
c)
Construction Contractors - When Not Liable For Tax
A construction contractor does not incur Retailers'
Occupation Tax liability as to receipts from labor furnished and tangible
personal property (materials and fixtures) incorporated into a structure as an
integral part thereof for an owner when furnished and installed as an incident
of a construction contract. The construction contractor incurs Use Tax on the
cost price of the tangible personal property that is incorporated into real
estate. (See also Section
130.2075
of this Part.)
1) For example, a
construction contractor does not incur Retailers' Occupation Tax liability on
receipts from selling and installing screen doors and windows; storm doors and
windows; weather stripping; insulation material; Venetian blinds; window
shades; awnings; cabinets built into the structure; floor coverings cemented or
otherwise permanently affixed to the structure by use of tacks, staples, or
wood stripping filled with nails that protrude upward (sometimes referred to as
"tacking strips" or "tack-down strips"), but not including floor coverings that
are area rugs or that are attached to the structure using only two-sided tape;
plumbing systems or parts thereof, such as bathtubs, lavatories, sinks,
faucets, water pumps, water heaters, water softeners, water pipes, etc.;
heating systems or parts thereof, such as furnaces, stokers, boilers, heating
pipes, etc.; ventilation systems or parts thereof; commercial refrigeration
systems or parts thereof; electrical systems or parts thereof; brick; lumber;
sheet metal; roofing materials, and other similar items.
2) A landscape contractor does not incur
Retailers' Occupation Tax liability as to receipts from labor furnished and
tangible personal property incorporated into real estate as an integral part
thereof for an owner when furnished and installed as an incident to a landscape
contract. For example, a landscape contractor does not incur Retailers'
Occupation Tax liability on receipts from selling and installing plants such as
trees, shrubs, seedlings, sod and grass seed when planted in the ground,
including fertilizer, mulch and soil incorporated into the ground in connection
with such planting (plants sold in pots or other containers without being
planted in the ground by the landscape contractor are not deemed to be planted
in the ground).
3) Construction
contractors who contract for the improvement of real estate consisting of
engineering, installation, and maintenance of voice, data, video, security, and
all telecommunication systems incur Use Tax, rather than Retailers' Occupation
Tax, liability on those items if they are sold at one specified contract price.
This provision applies to all of the items in this subsection (c)(3) even if
they are not incorporated into real estate.
d) Real Estate Developers
1) A real estate developer does not incur
Retailers' Occupation Tax liability on his receipts from selling real estate.
However, for information concerning the fact that a real estate developer is
taxable on his cost price of the tangible personal property that he purchases
and incorporates into real estate, see Section
130.2075
of this Part.
2) A real estate
developer incurs Retailers' Occupation Tax liability when transferring, to a
user, tangible personal property which he purchases and sells in a finished
form, and which remains personal property when installed, even though he
includes the transfer of such tangible personal property in his sale of or his
contract to sell real estate. The value of such tangible personal property for
computing Retailers' Occupation Tax is the amount charged for such tangible
personal property by the transferor if a separate charge is made, but not less
than the cost of such tangible personal property to the transferor. If no
separate charge is made for such tangible personal property, the value of such
property for computing Retailers' Occupation Tax is the cost of such property
to the transferor.
e)
Certain sales of building materials purchased for incorporation into real
estate located in an enterprise zone are exempt from Retailers' Occupation Tax
liability (see Section
130.1951
of this Part). Certain sales of building materials purchased for incorporation
into real estate located in an area designated by the
Department of Commerce
and Community Affairs under Section 5.5 of the Illinois Enterprise Zone
Act are
exempt from Retailers' Occupation Tax liability (see Section
130.1952
of this Part).