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August 6, 2007
Sales tax on contractor services?
Is it common/standard practice for contractors to charge a tax on their work/services? The initial bid that we received from a contractor (and based on which we chose that contractor) did not include sales tax, but the updated bid/estimate that we received in final stages of contract negotiation has an additional line item adding 8.375% sales tax to the total amount. Thanks.
Comments
How come you get an updated bid now.
If they don't show tax to begin with you don't pay Tax at the end.
I never ever ask for more money or take a penny away from the agreement.
That's why everything should be on paper beforehand.
A homeowner don't like to be riped off never the less an honest contractor.We are hard working men and women just like you.
Find an honest contractor.
Good luck.
Posted by: brownstonetoner at August 6, 2007 9:08 PM
This happened to me and resulted in a nasty fight between me and a floor guy. Please refer to my comments to the post a few posts down where a brownstoner asks for references for a floor guy.
This is outrageous and dishonest. Routinely, tradesmen disclose up front if you are willing to pay in cash they will forego the sales tax. But someone who says something costs x dollars and then says at the end that it is x plus tax if you write a check is a sleezeball. That IS NOT acceptable.
Posted by: donatella at August 6, 2007 9:21 PM
Actually I should correct that. The tradesman in question quoted a certain price and as we were about to sign the contract sprung that on me (not after the work was done). It is still sleazy.
Posted by: donatella at August 6, 2007 9:24 PM
Yes, you have to pay tax. That they did not include it up front sucks. But you still have to pay it.
Posted by: Archie at August 6, 2007 10:14 PM
If the contractor is not charging sales tax, he (or she) is probably not legit. Most businesses do not include the sales tax on the published price (restaurant, home depot, phone company) What kind of business IS exempt from charging sales tax?
Posted by: Anonymous at August 6, 2007 10:21 PM
Sometimes these answers are very wrong. There is a list of SALES AND USE TAX CLASSIFICATIONS OF CAPITAL IMPROVEMENTS
AND REPAIRS TO REAL PROPERTY it's Publication 862. It breaks down when an how sales tax is charged. For a lot of new work you give the contractor a Capital Improvement form and there is no sales tax. If he does charge you, that's the illegal part. It's just a profit. Read the rules. I have apply them many times and saved $.
Posted by: Eric at August 6, 2007 11:25 PM
Sometimes these answers are very wrong. There is a list of SALES AND USE TAX CLASSIFICATIONS OF CAPITAL IMPROVEMENTS
AND REPAIRS TO REAL PROPERTY it's Publication 862. It breaks down when an how sales tax is charged. For a lot of new work you give the contractor a Capital Improvement form and there is no sales tax. If he does charge you, that's the illegal part. It's just a profit. Read the rules. I have applied them many times and saved $.
Posted by: Eric at August 6, 2007 11:25 PM
Sometimes these answers are very wrong. There is a list of SALES AND USE TAX CLASSIFICATIONS OF CAPITAL IMPROVEMENTS
AND REPAIRS TO REAL PROPERTY it's Publication 862. It breaks down when an how sales tax is charged. For a lot of new work you give the contractor a Capital Improvement form and there is no sales tax. If he does charge you, that's the illegal part. It's just a profit. Read the rules. I have applied them many times and saved $.
Posted by: Eric at August 6, 2007 11:26 PM
You absolutely do NOT have to pay sales tax. He is consciously ripping you off!
Posted by: Anonymous at August 7, 2007 10:24 AM
You do have to pay sales tax the Certificate of Capital improvement only covers tax on labor for installation. Call the Dept. of Finance to find out who to believe.
Posted by: anon at August 7, 2007 10:38 AM
I'd like to know the real answer here. Based on what I've been told, you don't pay sales tax on things that become a permanent part of your home--sinks, toilets, flooring, even paint if you're painting during an extensive reno.
Posted by: Jane at August 7, 2007 11:58 AM
Here is the link to the pdf of the rules.Read them and you will have your answers.
http://www.tax.state.ny.us/pdf/publications/sales/pub862_401.pdf
Posted by: Anonymous at August 7, 2007 1:57 PM
Yes you should pay sales tax and yes the contractor should have included it in the bill and been clear about the fact that it would be added into the number that you saw. Many contractors will overlook the tax if they are paid in cash.
The real question is, what do you think is right and/or fair? Do you believe that it was an oversight? Is your contractor a nice person. If you think that it is all shady then don't pay. If he wants to be a good citizen he can pay take off the tax and pay it. He could meet you half way and pay 50%. Is this a "totally legit" contractor or a guy who works out of his truck? I'm sure that you can tell by the way he runs his business, if he pays taxes or not. Does he have insurance? If he doesn't, I highly doubt that he is paying taxes. Tell him that you want to se his tax return.
Posted by: anonymous at August 7, 2007 2:55 PM
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