sales tax

If it is a capital improvement, there is no sales tax. Otherwise there is sales tax.

Replacing or repairing something is not a capital improvement. Taking out a wood floor and putting in a new wood floor you like better is not a capital improvement.

A capital improvement includes things like: replacing old toilet with low-water-use model; replacing wood exterior door with insulated exterior door; putting in a permanent air conditioner/central air where there was not one before; putting in double glazed windows where there were single pane before. The common thread is that all these things in theory increase the value of the property.

Depending on the job, your previous contractor might, maybe, have fudged things to avoid the tax for you and this new contractor is playing by the book. If you're smart you would rather work with an honest contractor.

I don't work with tax cheats because if they'll play games with the government that licenses them, they will surely cut corners on my job too, if they think they can get away with it. You can't watch em every minute, and even if you can, do you know enough about construction to know bad work when you see it? Most people don't.

If you disagree with the contractor's judgment, you can ask to sign the waiver form where you accept responsibility for the work being a capital improvement. Most contractors I've worked with lately ask me to sign this anyway.

Good luck on the job!

for most construction projects you are exempt from sales tax. However there is the gray area of painting, staining compounding etc. Please refer to Publication 862 of the New York State Dept of Taxation and Finance. You can see yourself how convoluted it can be.

PS I own a construction company.

In NJ (where I have done a lot of construction) the rule is that sales tax is not due on the LABOR component of capital improvements but is do on the MATERIALS no matter what.
This was made abundantly clear to me when auditors requested invoices on all capital purchases over a three year period and assessed back sales taxes on all invoices that did not clearly show or state that sales tax had been paid on the materials.
I would guess NY is the same.....this is a generally very poorly understood area of sales tax law.

MJS: I'm surprised! Usually you pay the Materials Supplier sales tax on the items you purchased. Unless you filed for exemption status.

At least that is how things work in NYS

Here's what I found at Pub 862:
"As a general rule, a contractor must pay sales tax to its supplier when it purchases tangible personal property. It does not matter whether the tangible personal property will be used in performing a capital improvement or a repair, maintenance, or installation service."

So as I indicated, the contractor pays the sales tax on materials (tangible personal property) and then installs it in your appartment. If the installation represents a "capital improvement" then the LABOR which he/she supplies is not subject to sales tax.

If the contractor purchases the materials tax free from his supplier by presenting a resale certificate (which he shouldn't do but it happens) then the tax on MATERIALS must be collected from the homeowner.

Homeowners (as the ultimate beneficiary) should be aware that the risk of tax collection can fall on them if the contractor screws this up and an audit ensues. As happened to me.

wow... interesting indeed. there was no reason for the contractor to request a resale certificate

odd indeed. he was playing games. are we speaking of big money?

It's big money if 8.375% of the materials is big. I suppose the state can also impose penalties but that would be unlikely for an innocent screw up.

And a contractor doesn't "request a resale certificate". He or she holds one issued by the State. In exchange for promising to collect tax from final purchasers, the contractor is permitted to purchase excluding tax.....though as noted above, using a resale certificate to purchase ex-tax materials that will be directly installed by the contractor on a job is an abuse of the resale regs.

If you think about it, one reason all the bubble states are seeing their tax receipts crumble is that they were collecting 6 to 8% of the cost of every cubic yard of concrete and every board foot of dry wall thrown up as condos and development housing country wide. Nice work if you can get it. Plus the transfer taxes on final sale.....

well we are heavily taxed in everything.. such is the state of our Union.

You would only use a resale certificate if your are a supplier as well. Sales tax can be imposed only once. It is very uncommon for contractors to behave this way. If your contract was a lump sum affair then he can't hold you responsible for the sales tax. If it was a time + material + equipment project then yes, you are liable for the sales tax. Either way I recommend you contact an attorney on this matter to better help you.

bid price, taxes included. Any taxes due and owing are owed by your contractor.

that said -- there is a tax form to fill out for capital improvements -- when i bought my windows, no tax with form, tax without. It covers the ass of the installer...