9203L1163A01



DATE: March 19, 1992

TO: Julie Farney, ************** Audit (**************)

FROM: Eddie C. Washington, Tax Administration Division (**************)

SUBJECT: Taxability of Services to Renovate a Golf Course

RE: ************** (TP)
**************
**************


Facts: TP is in the golf course construction business. All contracts reviewed 
are lump-sum and are considered new construction by TP. The particular contract 
enclosed was entered into on January 11, 1991, with a country club for a 
complete renovation of the golf course. The purpose of the renovation was to 
secure flood control detention ordered by ************** County. Based on 
information from INDIVIDUAL, TP's president, the basic scope of the work 
consisted of leveling the golf course and performing the construction of the 
redesign to the owner's specifications. A price schedule enclosed with the 
lump-sum contract listed the following items as the work to be done:

Excavation: This activity consisted of digging new lakes and expanding others 
on the golf course and digging up the bunkers, tees, fairways, and greens. 
Also, a gunnite wall was demolished.

Shaping and fine grading: This charge was for moving dirt to places specified 
by the county for flood control and shaping the fairways, greens, tees, etc. to 
the owner's specifications. Also TP spread seedbed purchased by owner.

Top soil stripping & replacing: This consisted of moving the top soil off to 
one side and then moving it back after completing the shaping and fine grading.

Cart path (removal): This involved digging up the existing cart path and 
burying it on site of the golf course.

Cart Path (new): The new cart path was placed in a different location on the 
golf course. This is based on INDIVIDUAL' explanation and the review of 
blueprints.

Pipe: This was the charge for performing the storm drainage system and 
irrigation system.

Question 1: According to TR 1263 (microfiche 9109T1137G11), taxable remodeling 
does not take place when an improvement to real property is demolished 
completely and another improvement to real property is constructed at the same 
site. Therefore, does the work described consist of real property remodeling 
because the areas on the golf course (green, fairways, tees, bunkers, etc.) had 
previously existed or does the work constitute new construction?

Answer: TR 1263 states that a golf course as a whole is not necessarily an 
improvement to realty. The areas of a golf course that are improvements to 
realty include, but are not limited to, fairways, greens, tees, cart paths, 
bunkers, irrigation systems, irrigation lakes, storm drainage systems, and 
walls. A determination must be made as to whether the improvements are 
completely demolished before the redesigning and shaping takes place. If any 
part of the existing improvement is left intact, the activity will constitute 
real property repair or remodeling.

The demolition of an improvement to realty is not taxable. The reconstruction 
or redesigning of an improvement to realty at a location that was demolished is 
considered new construction. See TR 1263.

The expansion of an existing lake is remodeling.

Question 2: Would the top soil stripping and replacing and other parts of the 
contract and accompanying change orders be considered landscaping services or 
would it be considered construction site preparation and new construction work?

Answer: The taxability will be taxed or not taxed according to the 
determination of whether or not the improvement is completely or partially 
demolished. See the answer to Question 1.

Question 3: This contract involves elements of new construction, real property 
remodeling, and real property services. Which parts of the accompanying 
contract and change orders are taxable and nontaxable under the applicable 
sales tax Rule 3.291, 3.356, or 3.357?

Answer: According to TR 1263, if the existing improvements are demolished, the 
redesigning is new construction. The spreading of the seedbed appears to be 
landscaping which is taxable under rule 3.356. Article 9, Section 9.1.4 of the 
contract makes Exhibits "B", "E", and "D" part of the contract. These exhibits 
itemize the various jobs to be performed and the cost for performing each job.  
Sales tax should apply to those jobs that are taxable services.




ACCESSION NUMBER: 9203L1163A01   
SUPERSEDED: N 
DOCUMENT TYPE: L 
DATE: 03/19/1992
TAX TYPE: SALES