Capital Improvement - sales tax on countertops?
So, I’ve seen the previous threads on sales tax on capital improvements (http://brownstoner.staging.wpengine.com/forum-archive/2007/08/capital-improve-1/) – and that contractors should NOT be charging sales tax in New York State on improvements that become a permanent part of your home. The thing is, when I bought new granite countertops for my kitchen, the company who sold and installed the counters didn’t tell me about the paperwork you have to fill out to avoid sales tax. I paid the full bill, including tax, before knowing about the Capital Improvement form (ST-124). Now I’m wondering – if I submit this form to my contractor now (60 days after purchase), is he legally required to refund me the sales tax? The previous threads have address submitting the paperwork up front, but not retroactively. The counter company is playing ignorant and telling me that they have never HEARD of such a thing and that ALL counters they have ever installed get taxed. The tax laws clearly contradict this, but do I have a leg to stand on since I already paid in full?
litachiqita
in Taxes 12 years and 9 months ago
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8 replies
bobjbkln | 12 years and 9 months ago
It was a totally different issue, but II had not trouble getting a refund of Sales Tax from the State. I canceled my extended warranty on my car immediately after purchase. Toyota USA returned the full principal but told me to go to the dealer for the NYS tax. The dealer (Bay Ridge Toyota) refused to cooperate so I applied to the State Tax Department. It was a simple form with routine documentation required. I had my check from the State back within a few weeks. It was easy. If your contractor refuses to do the right thing, the State should deliver for you.
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litachiqita | 12 years and 9 months ago
Thanks for everyone’s responses – counters definitely fall under “capital improvements” and shouldn’t be taxed. I’ve read the instructions and the guidelines. My issue is that I didn’t provide the paperwork up front (and I feel that – if I was dealing with an honest salesman/contractor – they would have at least told me that this paperwork existed), so I’m unsure whether I can do this after I’ve already paid the bill (even though there’s that 90 day language, there’s no language addressing who I would get the money back from – the contractor or the state). The company pleading ignorance on the subject also seems pretty offensive, given that I believe this is a standard proceedure. @thetinkerswagon I will definitely give that a try, as I’d really rather not have to go through the hassle of getting the money back from the state. Thanks for your help!
psp215 | 12 years and 9 months ago
Look at this tax.ny.gov pdf — it explains things very clearly. I think you have 90 days… http://www.tax.ny.gov/pdf/publications/sales/pub862_401.pdf I’m very happy I saw this — I was unaware of this great tax break for our upcoming renovation!
stevecym | 12 years and 9 months ago
my guess is that this is capital as cabinets certainly are. As a contractor who signs the st-124’s with customers all the time, I cannot see why they will not honor this after the fact and refund the tax part (on the labor, not on the tax they paid on the material). I can see them balking if they have already sent it into the state and if they file quarterly, that may be the case. Some of us file annually (in March). I have a suspicion that there is something else going on here which I do not want to suggest in writing so I will make a suggestion. Call them back. Tell them that if they do not want to sign the ST-124 with you and refund the tax, you will call the State Sales Tax Dept and try to get the money back from them (there is a way to do this, I paid tax I should not have years ago and got it back later when I had my paperwork in order). Tell the contractor you will need their Sales Tax ID number to file the claim. I bet they jump through hoops when you say this – no contractor want their customer calling the tax office about anything – it will set off too many bells and whistles. Steve
Rick | 12 years and 9 months ago
Good question. Is it considered permanent? Consult your tax accountant about this and get him to write something. If the law is on your side you shouldn’t be paying sales tax on it.
greenmountain | 12 years and 9 months ago
As a contractor with a tax id, I have consulted the NYS dept of taxation and finance from time to time. I sure don’t want to get stuck with a big tax bill, which my client should have paid. My questions were answered cogently and (obviously) with authority. Try them; they answer their phone and email. Here, we are a free for all. This is not legal or accounting advice. Somebody else will probably disagree… No tax on a contracted service creating new, permanent parts of your home, but the obligation to prove it is on the consumer, not the contractor. The contractor should collect sales tax on all their services UNLESS the consumer completes a certificate of capital improvement. I pay sales tax at stores on all materials I later install as capital improvements. I pay tax on stone tile, which I install, but not on stone countertops, which my fabricator installs. Tricky. In any case, it is up to me to establish lawful status with my supplier. If I were a manufacturer, I would also have to prove my tax exempt status to my suppliers. My wholesale goods are sold to retailers who charge their customers the sales tax. My suppliers are not obligated to prove how I will use the materials they sell to me. Same goes for charities. Not everyone can walk in to a store and declare they tax exempt. Real non-profit organizations must present a certificate. It is not the obligation of the store.