Free guide for contractors
Do contractors charge sales tax in New York?
General information, not tax advice. Tax rules change and depend on the details of each job. Confirm how they apply to your business with your accountant or the state's revenue department before relying on them.
NY New York
Depends on the jobIt depends on the job. A capital improvement carries no sales tax; repair, maintenance and installation work is taxed on the whole charge.
New York splits work on real property in two. A capital improvement is an addition or alteration that meets all three tests: it adds substantial value or prolongs the property's life, it is permanently affixed, and it is intended to be permanent. On a capital improvement the contractor pays tax on materials to its supplier and collects no sales tax from the customer.
The contractor should get a completed Form ST-124, Certificate of Capital Improvement, from the customer. Without the form, the contract or other project records can still show that the work was a capital improvement.
Repair, maintenance and installation work is taxable, on all materials and labor billed. Repair and maintenance means keeping or restoring real property to fitness, efficiency, readiness or safety. Installing items that stay tangible personal property, such as washers, dryers, refrigerators and furniture, is a taxable installation, and the item itself is a taxable sale.
Lawn mowing, hedge and tree trimming and snow removal are taxable maintenance. Planting a new lawn, shrubs or trees is a capital improvement.
It turns on: whether the work meets all three capital improvement tests; whether the customer gave a Form ST-124; whether the customer is an exempt organization with an exemption certificate.
Watch out for
- No tax is charged to an exempt organization that gives the contractor a properly completed exemption certificate, Form ST-119.1 (TB-ST-129).
- Exemption documents must be received within 90 days after the service, or the contractor must collect the tax (Publication 862).
“Maintaining, servicing, and repairing real property are services that are subject to sales tax.”NYS DTF, TB-ST-505