Was a charge to move tangible personal property taxable when the mover had to disassemble it and reassemble it at the new location?

Plain-English summary

Utah Private Letter Ruling 92-008 addressed movers who had to disassemble property, relocate it, and reassemble it at the destination.

Examples included beds, entertainment centers, computers and peripherals, conference tables, office workstations, and a grand piano.

The Commission said the charge remained a nontaxable moving service when the disassembly and reassembly were incidental to the move.

Moving versus taxable installation

Utah Code section 59-12-103(1)(g) taxed services to install tangible personal property in connection with other tangible personal property.

The Commission said the sales-tax law did not impose tax on the charge to move tangible personal property.

Partly disassembling an item to move it and reassembling it afterward did not make the main moving purpose taxable.

Incidental reassembly

The response distinguished reassembling furniture from fabricating a wall section out of a customer's materials.

Reassembling furniture or another item was incidental to moving it.

The requester had described reassembly as a small part of the total charge and said there was no property sale in the relocation transaction.

Holding

Under the stated facts:

• The charge to move tangible personal property was not taxable.
• Necessary partial disassembly did not change the result.
• Reassembly after the move did not change the result.
• Reassembly was incidental to the main moving service.
• The transaction differed from taxable fabrication of a wall section.

What this means for you

Moving companies

Document that relocation is the main purpose and that any disassembly and reassembly merely facilitate the move.

Office-relocation and furniture businesses

A prior sale or installation does not by itself make a later relocation service taxable under this historical ruling.

Accountants and tax professionals

Distinguish incidental reassembly from fabrication or a substantial independent installation service, and verify current Utah law.

Common questions

Q: Was the charge to move property taxable?

A: No.

Q: Did disassembling the property make the move taxable?

A: No, when disassembly was needed to facilitate the move.

Q: Was reassembly taxable installation?

A: Not on these facts. It was incidental to moving.

Q: Did the Commission treat furniture reassembly like wall-panel fabrication?

A: No. It expressly distinguished the two.

Key source language

• Moving charge: “There is no provision in the sales tax law to impose tax on the charge to move tangible personal property.”
• Main purpose: “does not make the main purpose of moving the property taxable.”
• Reassembly: “The reassembly of a piece of furniture or other item is incidental to moving it.”

Citations and references

• Utah Code Ann. § 59-12-103(1)(g)

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 92-008
• Scope note: the request described relocation of existing property with minor disassembly and reassembly but no new property sale.
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

Response
July 17, 1992

July
17, 1992

XXXXX,
UT XXXXX

Re:
Advisory Opinion

Dear
XXXXX:

This
letter is in response to your recent request for a Tax Commission ruling on whether sales tax is due on any portion of the charge for services to move tangible personal property where a portion of the service involves disassembly and reassembly.

The
Tax Commission policy is to refer such requests to the division most qualified to analyze the request and make recommendations concerning it. As such, your request was referred to the Tax Commission's Auditing Division for their analysis and recommendations. The division's recommendations are as follows:

1. Utah Code Section 59-12-103(1)(g) imposes a
   tax on amounts charged for "... services to install tangible personal property in connection with other tangible personal property." There is no provision in the sales tax law to impose tax on the charge to move tangible personal property. The fact that certain types of property are partly disassembled to move them and reassembled afterward does not make the main purpose of moving the property taxable.

2. The reassembly of a piece of furniture is
   very unlike the labor to fabricate a wall section, which was the subject in the Attorney General opinion. The reassembly of a piece of furniture or other item is incidental to moving it.

For
the Commission,

Joe
B. Pacheco

Commissioner

Joe
Pacheco, Commissioner

Utah
State Tax Commission

160
East Third South

Salt
Lake City, Utah 84134

REQUEST
FOR FORMAL ADVISORY OPINION Sales & Use Tax

Dear
Commissioner:

A
business contracts to move tangible personal property to a second location. In order to make the move, the mover deems it necessary to disassemble the property, move it to the new location and then reassemble it.

Is
the transaction explained above subject to the Utah sales tax. If the transaction is taxable, would any of the component parts be exempt if billed separately.

Some
examples of moving when disassembling and assembling is involved are:

beds,
both water beds and regular beds

home
entertainment centers

computers
& peripheral parts

conference
tables

office
work stations

grand
piano

In
any of the examples listed above charge for reassembling the property would be a small part of the total charge. Take, for instance, a company decides to relocate its accounting department from the 5th floor to the 4th floor, and that they have similar equipment to that which the tax commission has in the Heber Wells Building. They have executive office with their desks, tables, chairs, files & walls. They have work stations for accountants, clerks, etc. They also have a couple of conference rooms and a library. The reassembling of the work stations, etc. is a minor part of the whole job.

This
job could be done by either a moving company or a retailer who sales & installs this type of equipment. The original sale and installation was previously taxed. There is no sale involved in this transaction, only the service of moving from one location to another.

XXXXX
of the auditing division, referred to an attorney general's opinion that the charge for putting a customer materials together to make a wall panel is taxable because of the provision in the law that the charge for attaching tangible personal property to other tangible personal property is taxable.

It
appears to me that there is a big difference in assembling and reassembling in order to facilitate a move and putting raw materials together to make a panel. XXXXX suggested a Formal Advisory Opinion be requested.

Thank
you for your consideration.

Respectfully,

XXXXX