do general contractors charge sales tax?
my general contractor is cahrging me sales tax on work done labor and materials is this normal????I thought sales tax was only charged on merchandise? Hes charging me sales tax on labor too.
- woodtick314Lv 71 decade agoFavorite Answer
In some states, labor is taxable. In others, just the material is taxable. If he's collecting it from you, and giving you a receipt showing tax collected, he must pay that amount to the state. If he isn't, he'll get caught eventually. Messing around when it comes to tax is not taken lightly by the government. Hope this helps.
- Boston FanLv 41 decade ago
I am an electrical contractor in Michigan. There was talk of a "service tax" but I think it was only like 1%. It may have gone through, I don't know. But it's nothing I've ever done. I do charge my customers sales tax but it's only the sales tax I paid my supplier but it can be done the other way too.
Sales tax is for merchandise and service tax is for labor. Check him out.
Also, if he quoted you a job and didn't write that "this price does not include sales tax", it is assumed that it does. He may have bid te job low and is just trying to find a way to make his money back.Source(s): Electrical contractor
- 4 years ago
There are 4 states that charges sales tax on labor services... Hawaii, New Mexico, South Dakota and West Virginia. All other states do not charge sales tax for labor. Hope this helps!
- dawnsdadLv 61 decade ago
I'm in California. Perhaps it varies by state. I have never heard of charging sales tax on labor. Call your State Board of Equalization to find out.
- How do you think about the answers? You can sign in to vote the answer.
- 1 decade ago
When i got my home remodeled, I called several contractors , told them what I wanted done, and they made a bid. I chose the one I liked most( not nesicerilly the cheapest). I only paid them what they bid. I live in TX and I haven't heard of that. You can't tax labor. Can you tax your job for the labor you do for them? NOPE neither can he. Check the Labor Laws. But I don't think he can.Source(s): remodeled home 4 months ago.
- hg3300Lv 51 decade ago
it probably depends upon the person, and with the economy in the shape it's in, all contractors may start charging tax on labor.
- cdpasoLv 51 decade ago
I guess it is state by state... we do not pay tax on labor in my state.