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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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Home Depot and lowes do not charge sales tax when a

Customer Question

Home Depot and lowes do not charge sales tax when a customers purchase window blinds and have them installed by the store. I am a small business that competes and have been charging sales tax putting me at a competitive disadvantage. What do they know that I don't?
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: Each of those stores told me if they don't install then they would have to charge sales tax. So obviously the requirement to charge sales tax has something to do with whether or no installation is provided.
Submitted: 5 months ago.
Category: Tax
Expert:  Matthew Breecher replied 5 months ago.

This varies by state; which state are you in?

Customer: replied 5 months ago.
Expert:  Matthew Breecher replied 5 months ago.

Something does not add up. This is from the Indiana website: "Contractors working under a lump-sum contract must either pay sales tax at the time the construction materials are purchased or use tax at the time the construction materials are incorporated into real property, if the materials were purchased exempt from sales tax as evidenced by a customer’s properly completed exemption certificate."

Expert:  Matthew Breecher replied 5 months ago.

In Home Depot collecting the revenue for both the product and the install? The only think I can imagine is that they are shifting the sales tax liability to the installer when they do the work.

Expert:  Matthew Breecher replied 5 months ago.

I can also tell you, as a former HVAC/R contractor myself; Home Depot negotiates a very low prices to pay contractors. Most contractor do the work because they don't have enough business and would rather make less per hour than nothing at all. So, competing with Home Depot is difficult, if not impossible.

Customer: replied 5 months ago.
they are collecting the revenue for product and installation at same time. The same installer that installs for Home Depot and lowes installs for me. He charges me the same as the big box stores and receives payment from them for each install. Due to the fact big box stores charge sales tax when no install and no sales tax with install, there has to be some type of rule or stipulation allowing them to not charge sales tax. This is the case for other products as well like flooring. I need to get confirmation of this stipulation so I can not charge sales tax.
Expert:  Matthew Breecher replied 5 months ago.

Yes, at some point someone has to pay the sales or use tax on goods. Indiana appears to be similar to every other state, and that is if the job is fixed price the tax is on the entire job, but if broken out just on the goods. If you are using the same installer, why not ask him? I also find the Government to actually be helpful, give them a call and ask why Home Depot doesn't charge tax when making the sale. Now, it could be Home Depot is factoring the tax from the sale and reporting it. Remember, sales/use tax does not have to be charged, it is technically the liability of the company selling and some companies elect to us the factoring approach to reporting sales/use tax.