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Revenue Administrative Bulletin 1988-35

Approved: June 10, 1988



(Replaces Position Paper SUW 84-001)

RAB-88-35. The Michigan Supreme Court, in Sequist v Fabiano, 274 Mich. 643; 265 NW 488 (1936), have cited the following general test to determine realty:

  1. Annexation to realty, either actual or constructive
  2. Adaptation or application to the use or purpose to which that part of the realty to which it is connected is appropriated
  3. Intention to make the article a permanent accession to the freehold.

Persons directly engaged in the business of furnishing and affixing wall-to-wall carpeting intended to be utilized as a finished floor covering meet the above tests and are deemed to be contractors for Sales and Use Tax purposes.

The contractor installing carpeting under the above conditions is subject to tax on the cost of the carpeting and other materials affixed to realty in performance of the contract, except qualified nonprofit hospitals or nonprofit housing entities.

Persons engaged in the business of furnishing and installing carpeting who consistently hold themselves out as retailers shall be liable for Sales Tax on the gross proceeds from taxable sales.

Sales tax is not applicable to separately itemized installation charges.