Were engineering services for standby generator systems and related building modifications taxable under Connecticut Ruling 89-191?

Note -- obsolete historical guidance. DRS marks this information "not current" and states that Announcement (AN) 94(3) obsoleted the ruling.

Plain-English summary

X Company designed standby electrical generating systems for telephone-switching buildings. Most of its work produced plans and specifications for the generator equipment, while a smaller part designed physical building modifications.

DRS said design of the generator system itself was not taxable because it concerned equipment rather than a building. Engineering that designed the building or building modifications was taxable and had to be separately stated on client bills.

What this means for you

The historical ruling separated equipment design from building design. AN 94(3) later obsoleted the guidance.

Common questions

Was generator-system design taxable? No under the ruling.

Was design of the building or its modifications taxable? Yes.

How should taxable building-design work be billed? Separately stated.

Citations and references

• Conn. Gen. Stat. § 12-407(2)(i)(F), as cited in the ruling.
• Public Act No. 89-251, as cited in the ruling.
• Announcement (AN) 94(3) -- identified by DRS as obsoleting this ruling.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 89-191

Original ruling text

Ruling 89-191, Engineering

This information is not current and is being provided for reference purposes only

Ruling 89-191

Engineering

This Ruling has been obsoleted by   AN 94(3)

You have inquired as to whether the services rendered by X Company are subject to the sales and use tax under Conn. Gen. Stat. §12-407(2)(i)(F), as amended by Public Act No. 89-251.

To summarize your letter, X Company designs stand-by electrical generating systems that produce electrical power in the event there is a power failure. The telephone company installs X Company's systems in buildings that house telephone switching systems. X Company's systems are typically placed into existing buildings, although a new building is involved in some cases. The major portion of X Company's work involves the production of plans and specifications for the stand-by generating system itself. A minor portion of the work involves plans for physical modification of the building into which the unit will be placed.

It is our opinion that all of the work performed by X Company with respect to the design of the generator system itself is not subject to the sales tax, because the work relates to the design of a piece of equipment and not to a building. However, that portion of the engineering services that involve the design of the building into which the generating equipment is placed would be subject to tax. Such services should be separately stated on X Company's bills to its clients.

LEGAL DIVISION

November 6, 1989