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If we sell and install storm doors and kitchen counter tops, the contract is without sales taxes on labor or materials. What if customer buys only materials?

Full Question: A national home good retailer sells and installs, for example, storm doors and marble kitchen counter tops. The contract to the customer is without sales taxes on either labor or materials. Apparently... if the product is installed in the home by us, there is no sales tax charged. If the customer buys the materials only at the register, there is a sales tax. I find nothing in the state sales tax code that allows this store to do it. What am I missing?

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Answer:

Diane Yetter photoThis is correct in states that consider the installation of storm doors and kitchen countertops to be real property construction. Sales of real property and usually the installation or repair of real property qualifies as a non taxable sale. However, the contractor is deemed to be the purchaser and consumer of the goods. Therefore, when a contractor purchases doors or countertops for installation into real property, they owe the tax on their purchase price and then there is no sales tax on their charge to the property owner. If the property owner purchases the materials and installs them, then they are the purchaser and owe sales tax on their purchase price which is the selling price. If you are the installer, you need to be sure you are accruing use tax on materials removed from inventory for installation if you purchased all the items in your inventory without tax.

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