Paying tax on work done?

[bmwpower]

All contractors out there... Do you generally charge tax on work done, for example installing an HVAC system, plumbing, etc?

I seem to remember seeing something about not paying tax for home improvements, etc.

I've had a lot of work done before by many contractors and I don't remember seeing tax on the paperwork.

Is this just them not wanting to report the income?

[Unregistered]

Are you talking about SALES taxes.

That is controlled by the states and laws vary drastically from state to state.

Some don't have sales taxes on labor. So the common thing in those areas would be for the contractor to pay the taxes on the product as he buys it and then it is built into the price.

Other states want sales tax on everything. Typically in those areas the cpmtractor has a sales tax license and does not pay taxes on what he buys. Then he will charge taxes on the total sale.

And there are other combinations. Some have taxes on repairs, but not new contrcution.

[bmwpower]

Yes, sales tax. My scenario has to do specifically with a capital improvement (new HVAC in detached garage, not a repair).

Ok, so I was able to find some information on the topic, but it appears to conflict...


http://www.state.nj.us/treasury/taxation/index.html?su_6.htm~mainFrame

"Labor charges are not taxable when the work performed results in a capital improvement. Installing a new roof, paving a new driveway and constructing a new garage are examples of capital improvements. When a capital improvement is performed on your home, you should issue the contractor a Certificate of Capital Improvement, Form ST-8. The sales tax exemption for capital improvements applies only to labor charges. "


BUT when I take a look at the publication (page 3) for more information...


http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/su2.pdf

"Capital Improvement. When the work performed on your real property results in a capital improvement, the contractor may not collect sales tax from you on any charges (materials or labor), provided you give the contractor a properly completed Certificate of Capital Improvement (Form ST-8)."


Maybe I'm misreading, but I don't think so. One says I don't have to pay taxes on the labor, the other says I don't have to pay tax at all. What gives?

[mdshunk]

Never heard of this. I charge sales tax on the whole shebang. Never had anyone raise a question either. Might be a thing special to your state.

[Newguy]

Is this just them not wanting to report the income?

*whistles* income... I didn't see any income.. . lol

[BOA]

The tree service I go through doesn't charge me tax if I pay cash....SHHHH.... ;)