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February 19, 2008
Sales Tax on Contractor Work
This is probably a "duh" question, but is it customary for a general contractor to charge sales tax on labor and materials?
Comments
Take a look at this
http://www.brownstoner.com/forum/archives/2007/08/capital_improve_1.php
Posted by: guest at February 19, 2008 2:40 PM
sales tax on materials - yes. Labor-no.
Posted by: guest at February 19, 2008 3:06 PM
OP here. Thank you both!
Posted by: guest at February 19, 2008 3:13 PM
I don't know if it's the same (I'm a photographer), but as a service provider, I charge sales tax on labor + materials. To be honest, I'm never sure if it's the correct thing to do, but that's what other photogs told me.
Posted by: rh at February 19, 2008 3:35 PM
this is brooklyn...no sales tax if you pay cash!!!!
Posted by: daveinbedstuy at February 19, 2008 4:18 PM
Contractors don't pay sales tax on materials, so how can they charge something they don't owe? (Over a certain amount, contractors' materials are tax free.)
Posted by: guest at February 19, 2008 4:53 PM
4:53, you are way off. AMount of sale means nothing. Contractors don't pay sales tax cuz they are buying for resale. In our system, the only one who pays sales tax is supposed to be the end user.
Posted by: denton at February 19, 2008 5:12 PM
sales tax should be charged on both goods and services received
Posted by: guest at February 19, 2008 6:37 PM
4:53, But we (service providers) have to pay sales tax to the government. It's not like we're collecting it and pocketing it.
Posted by: rh at February 19, 2008 6:41 PM
4:53
contractors don't pay tax on materials when they pay cash.And yes this is Brooklyn...
And that is how the cookie crumbles (Bruce almighty said that)
Posted by: guest at February 19, 2008 6:55 PM
Capital improvements are exempt from sales tax.
Service and maintenance is subject to sales tax on materials and labor.
Finally, contractors pay sales tax on materials. Or at least I do every day, at yards I have accounts with and at stores and specialty suppliers.
Posted by: guest at February 19, 2008 10:57 PM
I manage construction and renovation projects. Contractors should not double tax you! If they have bought the materials for resale then they will charge you tax on the materials. Sales tax should only be paid by one end user. If they bought the materials retail (ie had to pick up something at the local hardware store to complete the job) they should not charge you tax on top of that portion of the the materials. They should just submit that for reimbursement.
Labor for capital improvement is usually exempt but repairs and maintenance are a taxable service. Be sure to read through, discuss with your tax professional and if appropriate submit to your contractor a certificate of capital improvement in which you instruct them not too. http://www.tax.state.ny.us/pdf/1997/st/st124_797.pdf
As to the previous thread where someone insuated that the sales tax is "pocketed by the contractor" that would be dishonest. In our business sales tax collected is reported and paid to the government.
-A
Posted by: guest at February 20, 2008 3:11 PM
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