When is it NOT a capital improvement --no sales tax (NY)?

D107

That's a very interesting point about the customer paying one way or another. But on a taxable job, isn't the customer paying twice--once to cover your taxes on the materials built into your price, and then again for the whole job? So with a capital improvement, customer's only paying once--for the taxes on materials you build into your price. (Not talking nonprofit org case here.)

Also as far as I know, contractors are not obligated to separate materials from labor on a bill, it's just a price, and tax gets charged on the total price. This does get a bit confusing......and I'll bet the whole accounting for all of this is a major headache.

Thanks,

David

D107

Sometimes not easy to say

Obviously a new boiler, etc. would be. Just had a new shower body installed at family house. Certainly seems to fit the definition of capital improvement, yet tax was charged. Whole new tile job had no tax.

Repairs are not generally considered cap. improvements, but suppose you install 3 new circs, etc. which technically become part of the property?

In NY they have the forms which the contractor and HO sign, which protects both in case of audit. But I understand it's up to the contractor to do this, otherwise he's liable if it turns out that tax was owed. However in many cases these forms are not used.

Thanks,

David

Glenn Sossin_2

The state always gets their share

To the best of my knowledge, there is always sales tax collected unless specifically exempted for a tax-exempt entity such as a church, school, municipality, or town subsidized tax-exempt project such as low income housing.

The contractor should build in to his costs, the sales tax on materials. He can not charge the customer sales tax if they fill out and provide the capital improvement form ST-124.

Publication 862 spells out what can be considered a capital improvement vs repair.

Hope this helps you. Its a tough subject.

gary_28

nys info

try this link if you live in NYS. it pretty much answers all your questions about taxes and capital improvements. http://www.tax.state.ny.us/pdf/publications/sales/pub862_401.pdf

Robert O'Brien

David

3 new circs to replace existing circs is a repair.3 new circs for 2 new zones and an indirect is a cap improvement

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Glen

similar in BC Canada

anything permanently fixed to the structure would be a capital investment. HO does not pay sales tax for the Improvement - but the Contractor does at source, which then becomes just part of the "wholesale" cost. There are exceptions to every law though - its always "caveat emptor".

Keith_8

sales tax

We do commercial work in CT and NY.

In CT when we do a project for a tax exempt facility we pay no tax on materials or equipment and we collect no tax from the end user.

In NY we are not allowed to charge the end user tax on the material or equipment. But we are obligated to pay the tax. We are supposed to build these taxes into the sell price of the project. What is the thought process here? The customer is tax exempt? How? We build it in and pass it on to the State. Makes no sense to me.

Keith

singh

Anything

that is an original install, or a complete replacement no sales tax.

Any repairs get taxed.

Replacing a shower valve, no tax. Reapairig a cartdridge or o ring for that showervalve, tax.

New circs, no tax. Maintenance, oil filter, nozzles etc, tax.

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Keith_8

headache

Headache for sure.

Luckily? The corporate office has the staff to deal with it. We have the pleasure of earning the business, they have the pleasure of tax compliance.

More and more complex every year.

Keith