Okay, I believe I finally have a handle on this question. I do apologize for the delay. Those are not quite windows you are selling, as I visited your website. In any event, you are still remodeling and improving real property
which is where I had to go to find the applicable law. And, your right, it makes no sense because if you pay sales tax at the wholesale level, isn't the state getting cheated out of retail sales tax? Apparently not in your situation:Labor to repair, remodel, or restore residential real property is not taxable. Residential real property means family dwellings, including apartment complexes, nursing homes, condominiums, and retirement homes. It does not include hotels or residential properties rented for periods of less than 30 days. The property doesn't have to be the residence of the owner.
I believe you are an all residential contractor so this should not apply:
On the other hand, the total amount charged for remodeling, repairing, or restoring nonresidential real property is taxable. Examples of nonresidential real property are hospitals, office buildings, refineries, warehouses, parking garages, retail shops, restaurants, manufacturing facilities, and other commercial establishments.
Incidentally, everything in italics was retrieved from the official Texas source:Please click here
Residential Repair and Remodeling When you repair or remodel residential property, you are a contractor. As a contractor, you may have a lump-sum contract (one price for the entire job). Or, you may have a separated contract (you charge separately for materials and labor). Under a lump-sum contract, you pay tax on all your supplies, materials, equipment, and taxable services when you buy them. You don't charge your customer tax.
So there it is right in black and white. The three scenarios would still be answered the same as my original answer, except, you won't be collecting tax on the contracts where labor is involved (lump sum contracts, I am hoping).
Now we get to why I asked you all those other questions. The most important part being what method you should use when you only sell the windows, and do let the do it yourselfers handle the labor. This is no longer a lump some contract. You are buying from the wholesaler, and selling retail. It's essential, make that crucial you have an adequate record-keeping system to separate these sales. The IRS
requires proper record keeping, and if they find your records in shambles if the dreaded Auditor comes knocking, you can get penalized. You are growing too, so you have even more incentive. I would think your business would be suffering a downturn in business based on the housing market, but that is why you do what you do. You know the business and market.
The following again is from the official Texas codes and does require you to use those forms on my original answer on "separate contracts". But this only applies to materials. I actually checked my new roof invoice and sales tax was itemized separately only for materials (nails, tape, etc). It is pretty clear here:Under a separated contract, you give your suppliers resale certificates instead of paying tax on materials you incorporate into the customer's real property, and on certain services if the charges for the services are separately identified to the customer. These services are surveying, landscaping, final cleanup, and security systems that are incorporated into the customer's realty. You then collect state sales tax, plus any local tax, from your customer on the amount you charge for the materials and those services. Your charge for the materials must be at least as much as you paid for them. The construction labor charge is not taxable.
Again, I do not know if that even applies to you, but I am assuming it does not. The services do not seem to be similar to your type of construction. However, when you are not performing labor on the job, those retail "windows," you will need to collect tax on the DIY sales, and that appears to be a significant, but not majority of your business. The problem is that now I have created a situation with so many different types of transactions, I'm not sure what to do either.
I know it is a pain, but you have too much to lose by not properly tracking your records. Once you get an automated bookkeeping system setup, I can tell you it is not all that bad. Setting it up is going to be rough, I can't lie to you.
So with all that, I am sure there is something I missed, and i want to make sure you let me know what else needs to be addressed.
1) Record keeping system - Just have to do it
2) Why is business booming in such a down market? Are these "windows" a relatively new concept? Have you worked on new construction sites/builders? Interesting business you have going, to say the least.
3)TEXAS SALES AND USE TAX RESALE CERTIFICATE
That is an updated link.
4) Please click here
for an interesting link I found very helpful (it may be one of your competitors).
5) Questions? I am sure you will have some.
Your Just Answer Expert,