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We purchase cabinets and granite counter tops from a vendor and resell. Is it considered real property and if so - are we liable for collecting sales tax?

Full Question: We purchase cabinets and granite countertops from a vendor and then resell to customers. Is it considered real property once it is installed in the home? and if so, are we liable for collecting and submitting sales tax?

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Answer:

Diane Yetter photoIf you sell the countertops to a customer and do not install them, then you are considered a retailer and must collect sales tax on the selling price of the countertops. If you sell and install the countertops, then you are considered a contractor. Contractors are considered the end user of materials incorporated into real property and should not collect sales tax from the customer on the contract. Rather, they owe tax on their purchase price of the materials they use and incorporate into the real property. This tax is deemed part of their cost price and can be recovered from customers in the cost of the materials but can not be separately stated on the invoice to the customer. If the tax is not paid to the supplier, then the contractor owes use tax directly to the department of revenue.

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