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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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For a manufacturer and retail water softening company in ...

Customer Question

For a manufacturer and retail water softening company in New york state, The product are eligible for capital improvement status. Does the manufacturer have to pay tax for the supplies to make this equipment?
Submitted: 8 years ago.
Category: Tax
Expert:  RD replied 8 years ago.
Is this equipment built for in house use? or for sale?
Customer: replied 8 years ago.
for in house use. Installed by us.
Expert:  RD replied 8 years ago.

You will pay sales tax on purchase of tangible personal property(supplies) though it is used in capital improvement property.

Here is a publication for your reference-

http://www.tax.state.ny.us/pdf/publications/sales/pub862_401.pdf

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Customer: replied 8 years ago.
Already had the nys bullitins. that's not the answer
Expert:  RD replied 8 years ago.

I referred you to the publication as it provided answer to your question that sales tax needs to be collected on supplies and materials used in capital improvement project. If a contractor would be doing this work for you than he would not charge you sales tax on the capital improvement work. But he will also be required to pay sales tax on all the parts and materials he buys for use in this project.

Note that

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.

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

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