REQUEST LETTER

 

03-006

 

NAME

ADDRESS

 

Dear TAXPAYER REP,

 

In the past, our scaffolding companies have always charged a labor tax on their scaffolding.

 

We now have a new company doing the scaffolding and they informed me that they were told not to charge tax on labor.

 

They own all their materials and erect the scaffolding for the unit and then when the work is done, they tear it down and take it with them.

 

This letter is a request for a letter of ruling on this tax law.

 

Thank you for your prompt attention and cooperation in this matter.

 

NAME

COMPANY

 

RESPONSE LETTER

 

April 14, 2003

 

NAME

ADDRESS

PHONE

 

RE: Request for Private Letter Ruling Concerning COMPANY Rental of Scaffolding

 

Dear NAME,

 

We have received your request for a private letter ruling concerning COMPANY rental of scaffolding. From your description, it appears that the companies with which you contract deliver scaffolding owned by them to the job site, assemble it, and then remove it at the end of the project. Concerning such transactions, you specifically ask if the cost of labor to erect and remove the scaffolding is taxable.

 

Transactions to lease or rent tangible personal property are taxable under Utah Code Ann. §59-12-103(1)(k). Because scaffolding is erected for only a temporary purpose, it is considered tangible personal property, the rental of which is taxable. Charges for delivery, set-up and removal of tangible personal property are merely part of the taxable rental charge when these services are anticipated by the rental contract.

 

However, there may be an occasion when a portion of the labor costs you describe could be nontaxable. Utah Admin. Rule R865-19S-78(a)(2) provides that “[s]eparately stated charges for labor to install personal property to real property are not subject to tax, regardless of whether the personal property becomes part of the real property.” Accordingly, should scaffolding, which although it retains its character as personal property, be sufficiently attached to be considered “installed” to real property, any separately stated charges for the installation of the scaffolding would be nontaxable. Please note that the rule also provides that any “[o]n-site assembly that does not involve affixing the tangible personal property to real property is not installation within the meaning of the rule.”

 

Nevertheless, because most scaffolding installations either “stand alone” or merely use the real property for support with minimal attachment, the erection of scaffolding would rarely be considered as having been installed to real property. Accordingly, it would be the unusual circumstance where the labor to “install” the scaffolding could be separately stated and be considered nontaxable. Even in such a circumstance, charges for labor to deliver, assemble and disassemble the scaffolding would remain taxable.

 

Please contact us if you have any other questions.

 

For the Commission,

 

 

 

Marc B. Johnson

Commissioner

 

MBJ/KC

03-006