Modular or Sectional Homes

(Rescinded October 30, 2002)
AUTHORITY: section 144.270, RSMo 1994. This rule was previously filed as rule no. 91 Jan. 22, 1973, effective Feb. 1, 1973. S.T. regulation 010-13 was last filed Dec. 31, 1975, effective Jan. 10, 1976. Refiled March 30, 1976. Amended: Filed Aug. 13, 1980, effective Jan. 1,
1981. Rescinded: Filed April 1, 2002, effective Oct. 30, 2002.
State ex rel. Otis Elevator Co. v. Smith, 212 SW2d 580 (Mo. banc 1948). Otis Elevator Company was in the business of designing, constructing, installing and repairing elevators in buildings.
Respondent claimed there was no sales tax due to petitioner Smith because the materials used to construct new elevators or to modify existing elevators lost their character or status as tangible personal property and became a part of the real property coincidently with their delivery and attachment to the building. Respondent kept a title retention clause in his contract with the building contractor allowing him to retain title to the elevator until he was paid in full and if not, to remove the elevator. Judge Ellison held this clause prevented the tangible personal property from being joined with the realty. Absent this contractual clause, the court would have reached a different conclusion.
Where the contract for installation of new elevators, and reconstruction or major repairs to existing elevators whereby elevator company retains title to materials until paid, the elevator company is liable for sales tax. Had the contract not contained the title retentions clause, the elevator company would not be liable for sales tax.
Where an elevator company does repair work on existing elevators and supplies small parts which become part of the elevator, and does not retain title to the parts, the company is not subject to sales tax. The parts become part of the realty (see Air Comfort Service, Inc. v. Director of Revenue, Case No.RS-83-1982 (A.H.C. 4/25/84) and Marsh v. Spradling, 402 SW2d 537 (Mo.
banc 1976)).
Marsh v. Spradling, 537 SW2d 402 (Mo. banc 1976). Appellant cabinet maker constructed wooden kitchen cabinets at his own shop and installed them in homes under construction. The Department of Revenue sought to collect sales tax on the sales of the cabinets as tangible personal property. Since installation of the cabinets was an integral part of the contract for sale, the cabinets became part of the real estate under the doctrine of fixtures. The time of transfer of title was upon transfer of the real estate and no transfer of tangible personal property subject to the sales tax law occurred.