[JTP]

Hello all. Just found out through my accountant that sales tax is supposed to be charged on painting jobs in NYS.

1) Do any of you charge and remit sales tax on jobs?

2) Is this a requirement in most or all states?

3) How do you handle the issues with customers?

Any and all input and help is appreciated. Thanks.

JTP

 

[Thepaintman]

Is this to be charged on paints and materials and/or labor? Haven't seen this here in California. At least the Contractor State License Board hasn't notified us accordingly nor have I heard of any such rumors. I hope not!!! What a hassle that would be.

Jerry

 

[Workaholic]

I do not. No such law here.

 

[timhag]

It's a no for me also.

 

[Brian]

No sales tax on residential work in Texas. There is on certain types of commercial work, which I stay away from.

Brian Phillips

 

[JTP]

NYS Tax Law Article 28 §1105 (5) Maintaining, servicing or repairing real property, property or
land, as such terms are defined in the real property tax law, whether
the services are performed in or outside of a building, as distinguished
from adding to or improving such real property, property or land, by a
capital improvement as such term capital improvement is defined in
paragraph nine of subdivision (b) of section eleven hundred one of this
article, but excluding (i) services rendered by an individual who is not
in a regular trade or business offering his services to the public,.......



NYS Tax Law § 1101 9 b (9) Capital improvement. (i) An addition or alteration to real property which:
(A) Substantially adds to the value of the real property, or
appreciably prolongs the useful life of the real property; and
(B) Becomes part of the real property or is permanently affixed to the
real property so that removal would cause material damage to the
property or article itself; and
(C) Is intended to become a permanent installation

JTP

 

[slickshift]

Like I tell my customers, I don't charge anybody sales tax







....I just collect it for the government

But really that's only for non-new commercial, and they get to discount the sales/use tax I paid on materials for their job
...but most don't know about that

 

[jackrabbit5]

The state of Iowa requires me to collect sales tax on my labor unless it is for new construction, which is exempt from the tax. Materials are always taxed.

 

[Plushpaint]

Here in yoorope we have VAT which you charge to the customer at 17.5% of the invoice amount, and then at a later date you reclaim the VAT you paid on materials for the job.

But you are only liable to collect VAT for the government if your business turnover is above £61000 (about $122000). In effect, this puts a ceiling on how much the small guys who work for homeowners can earn, because if you are required to charge VAT then you are 17.5% more expensive than the other guy.

If you want to run a bigger painting outfit, then you have to either just do commercial (everyone deals with VAT), or reduce your overhead rate to take up the slack (by having lots of painters), or only working for people who are not too worried by price.

Either way, you need to make a big jump in turnover to maintain profitability. Doing homeowners painting whilst just over the VAT limit is a slow death.

 

[Bibleman]

A definite YES in NJ. I've already had a two day sales tax audit and they wanted to go back seven years! Fortunately I do everything by the book (pun intended!) so I was safe. Every so often the tax guy comes into the paint stores in my area and takes names and numbers off the cards on the cork board. He knows it's easy money to get the newbies.

 

[JTP]

Sales Tax and Pricing

If you do remit sales tax--at this point rabbit and bible man do, does this factor put you at a disadvantage to those who are supposed to collect and remit sales tax, but don't? Meaning--if i give a $5000 estimate and add the proper sales tax and my competitor bids $5000 and leaves off sales tax. doesn't that put my at a huge disadvantge right off the bat?

It seems to me, the home owner is concerned with the elevated price more than my requirement to collect sales tax. The only argument I can think of for hiring me and paying the sales tax is: "Heck if this guy is that honest, he must be a terrific painter." Based on that, he's worth it."

I suspect that one home owner argument will be, although it would not be shared up front: "Sure he's collecting sales tax and putting in his pocket. My local Sales Tax rate is .0875. On a $5000 job, that's an estra $437.50.

Most folks here where I live would probably give the job to the competitor not collecting the sales tax. I know I can tell the customer I only collect if for the State, but it's still a large out of pocket expense that could be avoided by not hiring me.

Thoughts appreciated.

JTP

JTP

 

[PressurePros]

No sales tax on labor in PA

Be careful on your estimates if you break out material costs. That is taxable. At least I'm told it is by my accountant.

 

[Rich]

hey thanks for this thread...you reminded me I need to fill out my OS-114

as usual...all zero's

thanks!

 

[JTP]

hey thanks for this thread...you reminded me I need to fill out my OS-114

as usual...all zero's

thanks!

OS-114????????????????????????????

JTP

 

[Rich]

OS-114 is my state's "Sales and Use Tax Return"

you must fill one out quarterly even if you don't charge sales tax

this will be my last one since packing it up...it was due Jan 31st...whoops, lol

 

[timhag]

OS-114????????????????????????????

JTP

http://www.ct.gov/drs/lib/drs/forms/2004forms/salesandusetax/os-114.pdf

 

[JTP]

Thanks Tim.

JTP

 

[timhag]

Thanks Tim.

JTP

No problem brother :thumbsup:

 

[Bibleman]

If you do remit sales tax--at this point rabbit and bible man do, does this factor put you at a disadvantage to those who are supposed to collect and remit sales tax, but don't? Meaning--if i give a $5000 estimate and add the proper sales tax and my competitor bids $5000 and leaves off sales tax. doesn't that put my at a huge disadvantge right off the bat?

It seems to me, the home owner is concerned with the elevated price more than my requirement to collect sales tax. The only argument I can think of for hiring me and paying the sales tax is: "Heck if this guy is that honest, he must be a terrific painter." Based on that, he's worth it."

I suspect that one home owner argument will be, although it would not be shared up front: "Sure he's collecting sales tax and putting in his pocket. My local Sales Tax rate is .0875. On a $5000 job, that's an estra $437.50.

Most folks here where I live would probably give the job to the competitor not collecting the sales tax. I know I can tell the customer I only collect if for the State, but it's still a large out of pocket expense that could be avoided by not hiring me.

Thoughts appreciated.

JTP

JTP

I'm sure I must lose some jobs over this but when I point out that I've been in business over 21 years and you don't get that far by being a "fly by night" type I think it adds some degree of credibility.

 

[cole191919]

In Canada we have GST and PST (General Sales Tax and Provincial Sales Tax). I don't have to charge PST but you would charge GST if you are bringing in at least 35K a year. Its unfortunate that you have to do so, but you pay tax on everything - houses, cars, food, clothing, etc.

"Three things in life are certain: life, death, and taxes."

At least thats how the saying goes...