Sales Tax State Activity Update - May 2005

Pennsylvania College Lays Ground - Tax Free

In a recent legal letter ruling, the Department of Revenue has ruled the installation of an artificial surface and sod for a playing field are nontaxable construction contracts.

A college holding a purely public charity exemption number seeks to purchase the installation of artificial turf for a soccer/lacrosse field and sod for the resurfacing of its football field. According to Pennsylvania sales and use tax law, these installations are considered nontaxable construction contracts. The college is not liable to the contractor for sales tax on these contracts. Rather, the contractor must pay sales tax to vendors on all materials used in installing the artificial turf and resurfacing the football field.

Building machinery and equipment may be purchased exempt pursuant to a construction contract. Building machinery and equipment is defined as generation equipment, distribution equipment, conditioning equipment, storage equipment, or termination equipment. The artificial turf and sod do not qualify as building machinery and equipment and therefore may not be purchased exempt by the contractor.

The full text can be viewed here.

(Pennsylvania Department of Revenue, Legal Letter Ruling No. SUT 05-005)

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