NJ sales tax on HVAC
 

Hi all,

What does this phrase from the NJ sales tax guidance mean?

"The purchase and installation of an air conditioner is taxable when
the unit is placed into an existing space
or metal casing that is part of a structure. An air conditioner that
can be removed from its casing by the
owner is not a capital improvement and remains tangible personal
property."

When is an central air conditioner not put into an 'existing space'?
Every AC unit, brand new or a replacement is put into an existing
space, not into outer space or something.

So if we replaced a 20 year old unit with new compressor, blower,
condenser - are we supposed to pay sales tax?

NJ sales tax on HVAC
 

loch wrote:
Hi all,

What does this phrase from the NJ sales tax guidance mean?

"The purchase and installation of an air conditioner is taxable when
the unit is placed into an existing space
or metal casing that is part of a structure. An air conditioner that
can be removed from its casing by the
owner is not a capital improvement and remains tangible personal
property."

When is an central air conditioner not put into an 'existing space'?
Every AC unit, brand new or a replacement is put into an existing
space, not into outer space or something.

So if we replaced a 20 year old unit with new compressor, blower,
condenser - are we supposed to pay sales tax?

My interpretation is window unit vs permanent installation.

The distinguishment between capital improvement and personal property
seems peculiar for sales tax assessment, however; I'd have to read
actual law/regulation to judge what it really means more conclusively.

--

NJ sales tax on HVAC
 

I think it means that if you purchase a window air conditioner unit (for
example), you DO have to pay sales tax on the unit itself and on the cost of
having a contractor put it in (if you used a contractor).

But, if you replace a 20 year-old HVAC unit with a new compressor, blower,
condenser, you DO NOT have to pay sales tax on the unit or on the cost of
having the contractor put it in. That would be considered an exempt capital
improvement, and no sales tax is due.

Here's a link that may help:

http://www.state.nj.us/treasury/taxa.../sales/st8.pdf

Paying a 7% sales tax for work done by contractors is fairly new in New
Jersey (enacted about a year or two ago). And, guess what...., if your
contractor does not charge you a sales tax when one is due, you are
obligated to pay it anyway. And, if you do not pay it, the state can hold
YOU responsible for it because you allowed the contractor to not charge the
tax This only applies to contractor work that the 7% sales tax applies to,
not to work such as replacing the HVAC because that is an exempted capital
improvement which is not subject to the sales tax.


"loch" wrote in message
...
Hi all,

What does this phrase from the NJ sales tax guidance mean?

"The purchase and installation of an air conditioner is taxable when
the unit is placed into an existing space
or metal casing that is part of a structure. An air conditioner that
can be removed from its casing by the
owner is not a capital improvement and remains tangible personal
property."

When is an central air conditioner not put into an 'existing space'?
Every AC unit, brand new or a replacement is put into an existing
space, not into outer space or something.

So if we replaced a 20 year old unit with new compressor, blower,
condenser - are we supposed to pay sales tax?

NJ sales tax on HVAC
 

wrote in message
...

Yes. The exemption you describe is for wall mount units that slide
into a permanently mounted sleeve.


I think you may have that backwards, although the OP's wording in the
original post was a little ambiguous.

A wall unit that slides into an existing space or sleeve can be removed and
it is therefore not a capital improvement -- it is tangible personal
property. It is taxable as would be the cost of paying a contractor to put
it in.

NJ sales tax on HVAC
 

Go to Delaware and buy it- no sales tax

On Sep 17, 3:06*pm, "alta47" wrote:
wrote in message

...



Yes. The exemption you describe is for wall mount units that slide
into a permanently mounted sleeve.

I think you may have that backwards, although the OP's wording in the
original post was a little ambiguous.

A wall unit that slides into an existing space or sleeve can be removed and
it is therefore not a capital improvement -- it is tangible personal
property. *It is taxable as would be the cost of paying a contractor to put
it in.

NJ sales tax on HVAC
 

Sorry. My case is a full central air unit. We were charged sales tax
and wonder if we should get a refund.

NJ sales tax on HVAC
 

I am not sure if you were responding to my post or to someone else's post.
But, looking back at what I wrote, I think I made a mistake.

I posted the following link:

http://www.state.nj.us/treasury/taxa.../sales/st8.pdf

I misread it before. The form at the above link says that the contractor is
to charge sales tax for "labor and services" unless the form is filled out
by the homeowner and contractor documenting that the work that was done was
a capital improvement (such as installing an HVAC system). But, at the top
of the form it says, "MAY NOT BE ISSUED FOR THE PURCHASE OF MATERIALS". In
other words, you DO pay sales tax on the equipment materials), but you DO
NOT have to pay sales tax to a contractor for labor and services when the
work is for a capital improvement (such as an HVAC system).

Do you mean you paid says tax on the labor for installing a full central air
unit, or do you mean you paid sales tax on the purchase of the unit itself?


"loch" wrote in message
...
Sorry. My case is a full central air unit. We were charged sales tax
and wonder if we should get a refund.

NJ sales tax on HVAC
 

On Sep 17, 8:20*pm, "alta47" wrote:
I am not sure if you were responding to my post or to someone else's post..
But, looking back at what I wrote, I think I made a mistake.

I posted the following link:

http://www.state.nj.us/treasury/taxa.../sales/st8.pdf

I misread it before. *The form at the above link says that the contractor is
to charge sales tax for "labor and services" unless the form is filled out
by the homeowner and contractor documenting that the work that was done was
a capital improvement (such as installing an HVAC system). *But, at the top
of the form it says, "MAY NOT BE ISSUED FOR THE PURCHASE OF MATERIALS". *In
other words, you DO pay sales tax on the equipment materials), but you DO
NOT have to pay sales tax to a contractor for labor and services when the
work is for a capital improvement (such as an HVAC system).

Do you mean you paid says tax on the labor for installing a full central air
unit, or do you mean you paid sales tax on the purchase of the unit itself?

Both. If you read the SU2 guidance at the same website you mention,
it seems clear that that statement you quote is talking about the
contractor buying the unit from the supply house. the end customer
pays no sales tax at all.

NJ sales tax on HVAC
 

So, what turned out to be the final answer? Did you ever get that figured
out?

I tried reading as much as I could and I couldn't figure it out. To me, the
wording on everything I read is ambiguous, and I know from experience that
trying to find an actual answer regarding tax questions on the New Jersey
website is virtually impossible. Calling the State is even worse.

If I have a new HVAC system installed to replace an old one: 1) do I have
to pay tax on the equipment?; 2) does the tax question depend on whether I
buy the equipment or the contractor buys it?; and, 3) do I have to pay tax
on the contractor's labor to install it?

Thanks.

"loch" wrote in message
...
On Sep 17, 8:20 pm, "alta47" wrote:
I am not sure if you were responding to my post or to someone else's post.
But, looking back at what I wrote, I think I made a mistake.

I posted the following link:

http://www.state.nj.us/treasury/taxa.../sales/st8.pdf

I misread it before. The form at the above link says that the contractor
is
to charge sales tax for "labor and services" unless the form is filled out
by the homeowner and contractor documenting that the work that was done
was
a capital improvement (such as installing an HVAC system). But, at the top
of the form it says, "MAY NOT BE ISSUED FOR THE PURCHASE OF MATERIALS". In
other words, you DO pay sales tax on the equipment materials), but you DO
NOT have to pay sales tax to a contractor for labor and services when the
work is for a capital improvement (such as an HVAC system).

Do you mean you paid says tax on the labor for installing a full central
air
unit, or do you mean you paid sales tax on the purchase of the unit
itself?

Both. If you read the SU2 guidance at the same website you mention,
it seems clear that that statement you quote is talking about the
contractor buying the unit from the supply house. the end customer
pays no sales tax at all.

NJ sales tax on HVAC
 

"alta47" wrote in message
. ..
So, what turned out to be the final answer? Did you ever get that figured
out?

I tried reading as much as I could and I couldn't figure it out. To me,
the wording on everything I read is ambiguous, and I know from experience
that trying to find an actual answer regarding tax questions on the New
Jersey website is virtually impossible. Calling the State is even worse.

If I have a new HVAC system installed to replace an old one: 1) do I have
to pay tax on the equipment?; 2) does the tax question depend on whether I
buy the equipment or the contractor buys it?; and, 3) do I have to pay tax
on the contractor's labor to install it?

Thanks.

Can't speak for NJ, but I just bought a new thermostat for my heat. No
sales tax. Surprised me, actually, since CT taxes things like breathing and
blinking your eyes.

NJ sales tax on HVAC
 

On Sep 17, 2:36*pm, loch wrote:
Hi all,

What does this phrase from the NJ sales tax guidance mean?

"The purchase and installation of an air conditioner is taxable when
the unit is placed into an existing space
or metal casing that is part of a structure. An air conditioner that
can be removed from its casing by the
owner is not a capital improvement and remains tangible personal
property."

When is an central air conditioner not put into an 'existing space'?
Every AC unit, brand new or a replacement is put into an existing
space, not into outer space or something.

I think the existing space means a space for the air conditioner, like
an existing through-wall sleeve or a window if it's a window unit.

So if we replaced a 20 year old unit with new compressor, blower,
condenser - are we supposed to pay sales tax?

That's essentially a new system, except for the duct work. I don't
believe it falls under maintenance or repair and that the work would
qualify as a capital improvement, but you really should call one of
the phone numbers on the capital improvement certificate to definitely
determine the status. The SU-2

If an owner gives a completed capital improvement certificate to a
contractor it removes the contractor's burden on collecting sales tax
based on the owner's say so. If at a later date the work is found to
be taxable, the owner is on the line for payment and penalties, not
the contractor.

If you've already paid the sales tax it will be much harder to get the
money back from the contractor. They may have already sent it in to
NJ.

R