Roofers Charging Sales Tax

MikeH: Curious about your rental setup, we are in a transition phase of doing the same thing. Do you have the rental company pay for all expenses on the trucks? We don't currently, but I'm checking in to the legality of it.

natty Said:

Mike H Said:

We basically have two options:.

I dont mean to beat this topic to death, but you still have not made yourself clear. As a contractor, the end user ultimately pays the sales tax. That end user is the property owner. In your option 1: you seem to be saying that you collect a sales tax on the entire contract price, whereas in your option 2: you are saying the supply house collects a sales tax only on the material and no more tax is collected other than that. That can not be correct because why would you ever choose your option 1 thereby making the property owner pay a much higher tax than they probably owe?

I am apparently perfectly clear, because your reply would indicate that you understood what I said perfectly.

As to why anyone would choose option 1? Beats me.

clover83 Said: MikeH: Curious about your rental setup, we are in a transition phase of doing the same thing. Do you have the rental company pay for all expenses on the trucks? We dont currently, but Im checking in to the legality of it.

Roofing company pays all expenses. The company that owns the vehicles is nothing more than a holding company. The purpose is largely to simply protect our vehicles from being lost in the event of a bad law suit. At one time, ownership was distributed to create an "arm's length" transaction, thereby providing some tax shelter as well, but now I own 100% of both companies, and the "closely held" or "related" companies are taxed at a combined income rate. Still, if something really bad were to happen, at least I would still have all my trucks to open up again..... 68 years and counting, so far so good, knock-on-wood.

It gives company's like us a slight advantage over the stores that also install their products.

Now what I first posted should make sense to you.

clover83 Said: MikeH: Curious about your rental setup, we are in a transition phase of doing the same thing. Do you have the rental company pay for all expenses on the trucks? We dont currently, but Im checking in to the legality of it.

There is no tax advantage for us to have a different company either. You need to charge 6% sales tax on the rental charge. Plus all the added paperwork.

Lefty Said: It gives companys like us a slight advantage over the stores that also install their products.

Now what I first posted should make sense to you.

No, it does not make sense. Either you have incorrectly stated the sales tax law or someone is collecting a tax that is not due. No law would be constitutional that gave someone an advantage within the same class of persons. It seems to me that if your state does not impose a sales tax on services and only taxes goods, then a place like lowes could set up a service division separate from its retail goods division and not collect a sales tax on services.

NJ sales tax on labor only on all repair work not material tax is already paid. Labor and material have to be broken out. On roof projects no sales tax they're capital improvement. I know I got hit pretty good one year.

Lefty Said: It gives companys like us a slight advantage over the stores that also install their products.

Now what I first posted should make sense to you.

According to this, PA imposes a sales tax on "property that is furnished and installed in the performance of con- struction activities." There is nothing in there that taxes the installation service or labor, or whether or not you have a store front, etc. So, if lowes is collecting a sales tax on the total contract price, then they are collecting a tax that is not owed.

When I get time, I will investigate OH sales tax laws.