Do Electrical Contractors Charge Sales Tax?

When a customer hires a home improvement company to install new smoke detectors, the electrician provides a separate invoice that lists the cost of the smoke detectors and the labor. If the combined charge is more than 10 percent, the electrician must charge sales tax. However, if the customer has a valid exempt use certificate, the electrical contractor does not have to collect sales tax.

In Massachusetts, electrical contractors are required to charge sales tax on the sales price of the materials they install. This is required by regulation 830 CMR 64H.1.1. This is also true for electricians who furnish material to customers. Massachusetts has a separate regulation addressing service enterprises: 830 CMR 64H.1.1.

If an electrical contractor acts as a vendor, he must provide a copy of Form ST 5C to vendors, as well as Form ST 12 to customers. These forms must be current. However, if the electrical contractor does not charge sales tax, he/she must file an ST-4. This form is the Sales Tax Resale Certificate, which must be properly completed and presented by the vendor to customers. Next article

If the job is not a capital improvement, it will be treated as repair, maintenance, and installation services. The full job price will be subject to sales tax. This means that you must ask yourself if your electrical contractor will charge sales tax on the job. The answer depends on the circumstances. If the job is for a capital improvement, you will be exempt. Otherwise, if it is a repair, maintenance, or installation service, the tax will be on the full price.

When a home improvement contractor charges a customer sales tax, he may charge the customer for the tax on the parts they purchased at Home Depot. However, if the work is done for a residential customer, the contractor must charge sales tax on the supplies and labor. However, repair work businesses must file sales tax quarterly, by the 20th of the month following the quarter. If they don’t file the tax, they risk getting hit with worse penalties.

If the job is a capital improvement project, you may be exempt from sales tax if the contractor is associated with real estate. CI projects include new construction, reconstruction, and remodel, but must meet certain documentation requirements. When you decide to hire a contractor for a capital improvement project, be sure to request a certificate of capital improvement. More

Although many electrical contractors do not charge sales tax, they do need to collect it. This tax is paid on the materials that are purchased and the materials that the electrical contractor uses. Some purchases are exempt, and others may have offsetting credits. In general, however, all labor and materials purchases are subject to sales tax and markups. This means that if you pay $150 for materials and $300 for labor, you’ll pay $450.