Sales Tax Articles
Sales Tax State Activity Update - February 2006
Pennsylvania "Breaks" the Sound Barrier Exemption
The Pennsylvania Commonwealth Court recently affirmed a decision and order issued by the Pennsylvania Board of Finance and Revenue denying a refund of sales and use tax paid by a contractor on the purchase of pre-cast sound barrier panels and steel I-beams, which were sold to the Commonwealth of Pennsylvania ("Commonwealth").
The contractor entered into contracts, which specified the work to be done and physical characteristics of the sound barriers, for the sale of sound barriers to the Commonwealth. The contractor did not charge sales tax to the Commonwealth for the sale of sound barriers, but did pay sales tax to vendors for the purchase of materials installed and used by the contractor in the performance of the contracts.
Pennsylvania statutes provide an exemption from sales and use tax for the purchase of building machinery and equipment used in the performance of a construction contract with tax-exempt entities.
Building machinery and equipment is defined as generation equipment, storage equipment, conditioning equipment and distribution equipment. Since the sound barriers are not included in the relevant definitions for building machinery and equipment, sales and use tax was properly paid by the contractor and the refund denied.
View the full text on the Pennsylvania Unified Judicial System Website.
(Pennsylvania Commonwealth Court Docket No. 106 F.R. 2004, 01/09/2006)
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