Information Release

ST 1999-06 - Service Station Canopies - June, 1999

This Information Release is being issued to announce a change in the Department of Taxation's application of sales and use tax to the erection of service station canopies. This change is made in response to a recent decision of the Ohio Board of Tax Appeals in F. P. & E., Inc. v. Tracy (March 18, 1999), B. T. A. Case No. 96-M-806.

Prior to this decision, the Department considered service station canopies to be real property. Any person installing service station canopies was considered a construction contractor. As a contractor, the installer was the consumer of all materials purchased for use in the performance of the contract.

In the F. P. & E. case, the Board of Tax Appeals determined that service station canopies primarily benefit the business conducted by the occupant of the realty rather than the realty itself. The Board ruled that installed service station canopies are business fixtures, within the meaning of section 5701.03(B) of the Revised Code. Therefore, they are to be treated as tangible personal property, not realty.

The effect of this decision is to change the Department's position on the application of sales and use tax. Since service station canopies retain their status as tangible personal property after they are installed, the sale and installation of such canopies is subject to sales tax. Persons who sell and install service station canopies should be licensed as vendors and collect sales tax from customers on the price of the canopies and the installation charge unless the customer provides a valid exemption certificate.

For audit purposes, this interpretation will be applied to all future transactions involving the sale and installation of service station canopies. It will also be applied to any past transactions if, at the time of the transaction, the seller and installer of service station canopies neither collected tax as a vendor nor paid tax as a construction contractor. If a seller and installer of service station canopies who paid tax as a construction contractor seeks a refund of the tax paid on a past transaction, that person will be expected to collect and remit tax from the consumer unless the consumer has a valid claim of exemption.

For purposes of this release, "service station canopies" include the canopies themselves, all electrical wiring for the canopies, any appurtenances to the canopies, and any concrete pads or islands used as foundations for the canopies. All of these items primarily serve the business conducted on the realty, rather than the realty itself. Within the terms of the F. P. & E. decision, all such items qualify as business fixtures under section 5701.03(B) of the Revised Code.

If you have any questions regarding this matter, you should call us at 1-888-405-4039.

OHIO RELAY SERVICES FOR
THE HEARING OR SPEECH IMPAIRED
Phone: 1-800-750-0750