§ 46.9. Financial institution security equipment.
(a) General. This ruling pertains to the sale, installation and repair of security equipment utilized by financial institutions. The effective date of this ruling is the date of adoption. Its effect is, therefore, prospective only, and it applies only to transactions involving security equipment consummated after the date of its adoption.
(b) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:
Financial institution—A corporation or association, such as a bank, a bank and trust company, a trust company, a savings bank, a mutual banking association, a savings and loan association, a finance company, a credit union, or other similar institution, which maintains a place of business in this Commonwealth.
Installation—An attachment or affixation of security equipment to real estate by means of one of the following:(i) A hook, bolt, screw, nail or other similar method.
(ii) Inserting equipment through a building wall or floor, or mounting it upon a specially prepared foundation, the removal of which may result in damage to the real estate.
(iii) Wire which is integrated into an electrical system.
Security equipment—Systems, devices and equipment, and their components, utilized by a financial institution for its protection or convenience in conducting financial transactions.(c) Sales and installation. Sales and installation shall conform with the following:
(1) A sale of security equipment which is also installed, as defined in subsection (b), by the seller or or the seller’s designee is a construction contract. The seller-installer may not charge sales tax of the Commonwealth to his customer upon the contract price. Rather, the seller-installer, as a construction contractor, is considered to be the consumer of property transferred in connection with the construction contract. He shall pay the applicable sales or use tax upon his purchase price of the installed equipment, or upon his purchase price of material acquired and incorporated into the installed equipment during the process by which it is produced by the seller-installer, in accordance with § § 33.1 and 33.2 (relating to definitions; and scope).
Examples. ‘‘S’’ Seller purchases 10,000 lbs. of material at $1 per pound from ‘‘C’’ Company. The invoice submitted by ‘‘C’’ to ‘‘S’’ includes a $10,000 charge for the material and a $100 charge for the delivery of the material.
‘‘S’’ then produces a vault door with 100 lbs. of the material, sells the vault door to ‘‘T’’ Trust Company, and installs it. ‘‘S’’ should not charge sales tax to ‘‘T’’. Rather, ‘‘S’’ is himself liable for the payment of sales or use tax on his purchase price of the material incorporated into the door, or $101—the price which ‘‘S’’ paid for the material plus a proportionate amount of the charge incidental to the delivery of the material.
‘‘S’’ Seller sells a drive-in teller window to ‘‘B’’ Bank. Prior to delivery of the window, ‘‘S’’ sends ‘‘B’’ specifications for construction of the wall in which the drive-in teller window will be installed. ‘‘S’’ does not prepare the wall into which the window will be installed. After the wall has been constructed by ‘‘B’’, ‘‘S’’ delivers the drive-in teller window, inserts it into the previously prepared opening, and bolts it into position. ‘‘S’’ is a construction contractor and is required to pay the applicable sales and use tax of the Commonwealth upon his purchase price of the drive-in teller window installed in ‘‘B’’ Bank.
(2) As a construction contractor, a seller-installer shall also pay tax upon all property, such as tools, equipment and supplies, which is used in the performance of a construction contract, but which is not transferred to a customer, in accordance with § § 33.1 and 33.2 and § 46.7 (relating to nonresident contractors).
(d) Straight sale. A straight sale is one in which security equipment of a type which does not require installation, as defined in subsection (b) is transferred, or one in which any type of security equipment is sold directly to a customer without installation by the seller or a designee. A straight sale is a taxable transfer of tangible personal property, and the seller shall register with the Department, to collect tax upon the total purchase price paid by a customer for security equipment, and to remit the tax collected to the Department.
(e) Maintenance. Maintenance shall conform with the following:
(1) Maintenance of installed security equipment on the premises in which it is installed, or maintenance of installed security equipment by a person who removes it from the premises for the work and later reinstalls it, is a construction contract. As a construction contract, the work is a nontaxable service to real estate, and the person performing the service may not charge tax to his customer upon the contract price. Rather, the person performing the service is responsible for the payment of tax upon the purchase price of any part or other tangible personal property which is transferred to the customer in the course of the service.
(2) Maintenance of security equipment which is the subject of a straight sale because it does not require installation as defined in subsection (b), or maintenance of installed security equipment which is removed by the owner or a designee and taken to the service premises, is a taxable service to tangible personal property. The person rendering the service shall register with the Department and collect tax upon both the labor charge and the charge for any part or other tangible personal property which is transferred to the customer in the course of the service. The resale exemption from tax is available to the serviceman upon the purchase of property which is to be transferred.
(f) Categories of security equipment. Examples of security equipment upon the transfer of which the seller is liable for the payment of tax when installed by him or his designee are as follows:
Accelerated cash terminals or cash guards.
Access control systems.
After-hour depositories.
Alarm systems (burglar, police, fire, and the like).
Automatic banking systems.
Bandit reserve barriers.
Bulletproof windows.
Customer convenience counters.
Drive-in windows (bay, flush, counter, and the like).
Fire doors.
Quick depositories.
Receiving lockers, heads or chests.
Safes.
Safety deposit boxes.
Surveillance and security systems.
Television banking systems.
Teller rails and lockers.
Vaults.
Vault doors (automatic, manual, emergency, and the like).
Vault ventilators.
Source The provisions of this § 46.9 adopted August 11, 1978, effective August 12, 1978, 8 Pa.B. 2244; amended March 19, 1993, effective March 20, 1993, 23 Pa.B. 1322. Immediately preceding text appears at serial pages (40370) to (40373).
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