Technical Assistance Advisory 88-008 Re: Sale Of Installed Windows Where Installation Performed By Third-Party Exempt From Sales Tax As Contracting Recently the State Tax Department received a request for an opinion regarding the question of whether the sale of windows with installation provided by a third party would constitute the rendering of a contracting service exempt from sales tax by the seller of the windows under the following circumstances. The seller is a producer of lumber products and also operates a hardware and lumber supply outlet. New and replacement windows are offered for sale in the outlet via display units. No inventory is maintained by the outlet. Installation service is available for all purchased windows. After a window is ordered by a customer, the outlet contracts with a third party window supplier for the delivery and, if desired by the customer, installation of the window. The window is provided from the inventory of the window supplier. Once the window supplier has fulfilled the terms of the contract, it charges the outlet for the window and any installation service performed. The outlet, in turn, bills the customer for the cost of the window and any installation services provided. The customer seeks satisfaction from the outlet as the provider of the product and installation service. Contracting is defined in W.

Va. Code §

11-15-2(o) as follows: "Contracting" shall mean the furnishing of work, or both materials and work, in fulfillment of a contract for the construction, alteration, repair, decoration or improvement of a new or existing building or structure, or any part thereof, or for removal or demolition of a building or structure, or any part thereof, or for the alteration, improvement or development of real property. For purposes of this definition, the term "structure" shall include, but not be limited to, everything built up or composed of parts joined together in some definite manner and attached to real property, or which adds utility to a particular parcel of property and is intended to remain there for an indefinite period of time. The West Virginia Consumers Sales and Service Tax and Use Tax Regulations, 110 C.S.R. 15 §

9.2.17 (as amended June

1, 1988) provide that contracting activities are per se exempt from sales and use tax. Since the installation of a window is clearly within the definition of contracting, such activities are per se exempt from sales tax. Where the contract for purchase and installation of the window is made directly between the outlet and its customer and that contract calls for the installation of the window as a condition of sale, the outlet is providing "contracting" services within the meaning of W.

Va. Code §

11-15-2(o). Such service, whether invoiced under one price or the price of the window and installation are stated separately, would be entirely exempt from sales tax. Where the outlet has the supplier of the window, or another party, install the window in fulfillment of its contractual duty to its customers to provide an installed window, the outlet is merely engaging in a subcontracting arrangement with the installer. It also must be stated that where installation of the window is a condition of the sale, the per se exemption for contracting is not materially affected when the window is in the stock of the outlet but delivered and installed by the window supplier. ______________________________ Michael E. Caryl State Tax Commissioner Date: November 10, 1988