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Old 11-10-2009, 10:44 PM   #1
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Can my contractor bill me sales tax on his overhead?


I live in Washington State and my contractor is adding sales tax to his overhead that is profit. Is this right?? It's money that he is charging us for the job done. It's paid to him as income. Why would you add sales tax?
Thanks for your input..


Last edited by sterling0514; 11-11-2009 at 12:21 AM.
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Old 11-10-2009, 11:00 PM   #2
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Can my contractor bill me sales tax on his overhead?


You would add sales tax because it is required. Does HomeDepot add sales tax to the entire price of a 2x4, or only that portion of the price which reflects materials, and not overhead and profit?

When you go to a restaurant, is sales tax calculated on the entire bill? How about when you get a haircut?

I bet your contractor just loves you


Last edited by Anti-wingnut; 11-10-2009 at 11:07 PM.
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Old 11-11-2009, 01:34 AM   #3
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Can my contractor bill me sales tax on his overhead?


It depends.

For instance in Texas and many other states, labor is not taxable, however, how a contract is presented will determine it's taxability, and States have different laws, so it's not as cut and dry as if you were purchasing just materials. eg. One price contract.

Residential vs Commercial etc. They are all different, so you will have to check with your state.
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Old 11-11-2009, 04:41 AM   #4
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Can my contractor bill me sales tax on his overhead?


states that tax services will require the contractor to tax the entire bill. labor + materials + overhead + profit = the cost of the job and is taxed.
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Old 11-11-2009, 07:58 AM   #5
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Can my contractor bill me sales tax on his overhead?


Quote:
Originally Posted by Bob Mariani View Post
states that tax services will require the contractor to tax the entire bill. labor + materials + overhead + profit = the cost of the job and is taxed.
Bingo

For the record, Shiela lives in Texas, I don't know where Bob lives, and I have lived my entire life in Washington
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Old 11-11-2009, 09:54 AM   #6
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Can my contractor bill me sales tax on his overhead?


In all honesty, it is a bit naive to even give much concern to the breakdown of a bill.
If I charge you x for item A, and y for item B... for a TOTAL of "z"...and you have an issue with any of it.................

My next bill will come to you with x and y adjusted relatively to satisfy you. But "z" will remain the same.
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Old 11-11-2009, 10:02 AM   #7
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Can my contractor bill me sales tax on his overhead?


Quote:
Originally Posted by sterling0514 View Post
It's paid to him as income.
No it's not. It is paid as services rendered. What he pays himself is his income

Are you going to be crying when a lumber truck makes a delivery, because Dunn's is charging more for lumber than HD. And he could have got his nails for less at Lowes, and he should have got his felt paper at Stoneway.
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Old 11-11-2009, 01:11 PM   #8
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Can my contractor bill me sales tax on his overhead?


Contractors make so much money-I fill my bath tub will all the old 20's and 50's that won't fit in my Rolls Royce.


So --OVERHEAD IS HIS PROFIT--yea, o.k.-I've got to figure out what that means.---

Last edited by oh'mike; 11-11-2009 at 01:40 PM.
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Old 11-11-2009, 03:55 PM   #9
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Can my contractor bill me sales tax on his overhead?


In NY there is no sales tax on capital improvements. If you do repairs, you charge sales tax, not on jobs such as an addition, new kitchen or bath.
Check your states laws.
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Old 11-11-2009, 04:09 PM   #10
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Can my contractor bill me sales tax on his overhead?


Whether sales is required or permitted to be charged, depends on the state where the transaction (usually the job location) is.

I worked for a material supplier that delivered the materials to the project. In one state we delivered to the sales tax was based/required to be calculated on the unit selling price less the delivery portion. In an adjacent state, we were not permitted to charge sales tax, but the contractor was required to pay directly to the state where the project was located and this was based on the entire material cost including delivery. - It is not easy for the contractor or supplier, especially when things can get audited later.

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Old 11-11-2009, 04:38 PM   #11
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Can my contractor bill me sales tax on his overhead?


Quote:
Originally Posted by Ron6519 View Post
Check your states laws.
Ron
Washington requires sales tax on the entire project.
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Old 11-11-2009, 06:22 PM   #12
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Can my contractor bill me sales tax on his overhead?


From the classes I have taken, and the paperwork issued: As a licensed contractor in three GA. counties, I am not allowed to charge taxes on labor, nor tax materials which I have already paid taxes on when purchased by me. Now that GA. has State Licensed General Contractors, I'm interested in whether the States Laws would be different than local county's. Thanks, David
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Old 11-11-2009, 06:51 PM   #13
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Can my contractor bill me sales tax on his overhead?


One way to check on the legality of collecting a tax, let him know you can call the state to make sure he reports the collection of the tax and submits the tax collected to the state. - That usually flushes out everything since he cannot afford to violate the tax laws.
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Old 11-11-2009, 07:23 PM   #14
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Can my contractor bill me sales tax on his overhead?


First, I DON'T live in Texas, I live in Southern Maryland, and the information I gave to sterling0514 was from something I had found, and read for my sister-in-law and had sent to her. (she lived in Texas at the time) take a look at this:

http://www.window.state.tx.us/taxinf.../tx94_116.html

If you read it, you will notice just how complicated the tax issue can really be. Leave it to the IRS!

Every state has it's laws concerning this, and then there is the IRS.

Even local lawyers don't know all there is to know about the requirements of this issue, my sister-in-law found that out, and won her case.

There ARE instances where the contractor can tax everything, and it's not only legal, but required, so you have to know exactly what you are doing, and what your state laws are. Don't forget the IRS TOO!!!
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Old 11-11-2009, 07:46 PM   #15
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Can my contractor bill me sales tax on his overhead?


Quote:
Originally Posted by Sheila4467 View Post

http://www.window.state.tx.us/taxinf.../tx94_116.html

If you read it, you will notice just how complicated the tax issue can really be. Leave it to the IRS!
I do not understand your statement. Why are you complaining about the IRS, using a State of Texas law as your evidence? The OP was concerned about Washington State. It really has no bearing where you or your sister-in-law live.

You're kinda a wingnut aren't you?

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