When purchasing materials for new construction, should I be paying sales taxes?
It is my understanding in New York state that if materials are part of capital improvements, that sales tax can be avoided? Form 210.1 or something similar.
I also understand that paid sales tax can be returned.
Can anyone provide any info on this?
Thanks.
Replies
Bruce,
First, the disclaimer.<g> I did work in Manhattan years ago, so my recollection could be foggy or the tax code could have changed. Back then, however:
The customer would fill out a "Certificate of Capital Improvement." I think it's ST-124. I don't believe that the certificate is mandatory...but...if the customer fills it out, the customer becomes responsible for proving that the work that was accomplished was a capital improvement and thus, not subject to him paying sale tax for the transaction.
If the customer did not fill out the ST-124, then the contractor has to show that the work done is not liable for taxation.
You, the purchaser of the building materials, are still responsible for paying sales tax on building materials that you purchase. However, the CoCI relieves the customer from paying sales tax on the entire amount that you invoice him.
If the work being done is simple repair type of stuff...then it does not qualify as a capital improvement. You'll pay sales tax on the building materials, the customer will pay sales tax on the entire amount of the job.
I think...<g>
Edit: I did a Google for "ST-124" and I got a hit for a PDF file. My Adobe is down though, so I coudn't open the file to see if it's useful. Still, here's the link:
http://www.tax.state.ny.us/pdf/1997/apcert/st124_797.pdf
Edited 4/14/2003 9:54:06 PM ET by Mongo