1. (1) This Part summarizes the principal provisions of the State and local sales and compensating use taxes as applied to contractors, subcontractors and repairmen.
2. (2) However, the provisions of this Part are not meant to supersede any tax imposed or exemption allowed by article 28 or pursuant to the authority of article 29 of the Tax Law or those provisions of the sales and use taxes more particularly described in other parts of this Title. In particular, this Part does not address the amounts of tax to be collected at the combined State and local rates.

3. (b) The principal distinguishing feature of a sale to a contractor, as compared to a sale to other vendors who purchase tangible personal property for resale, is that the sale of tangible personal property to a contractor for use or consumption in construction is a retail sale and subject to sales and use tax, regardless of whether tangible personal property is to be resold as such or incorporated into real property as a capital improvement or repair. Whenever a contractor uses materials, on which the contractor has paid sales tax, in a repair or maintenance contract (except interior cleaning and maintenance contracts of 30 days or more) subject to the sales tax on services under section 1105(c) of the Tax Law, the contractor may be entitled to a refund or credit of the portion of the tax he paid attributable to the materials transferred to the customer.

   Cross-reference:

   For refund or credit, see section 534.5 of this Title.

4. (c) Receipts from the performance of a capital improvement to real property by a contractor are not subject to the sales tax.

   Cross-reference:

   For additional information on capital improvements and repairs see section 527.7 of this Title.

5. (d) Receipts from the services of repairing, maintaining or servicing of real property (except the interior cleaning and maintenance contracts of 30 days or more described in section 527.7[c][3] of this Title) and tangible personal property, and the receipts from the installation of tangible personal property that remains tangible personal property are subject to the New York State and local sales tax unless otherwise exempt.
6. (e) Tangible personal property purchased by a contractor that is to become an integral component part of real property owned by an organization described in section 1116(a) of the Tax Law is exempt from the New York State and local sales tax. (For contracts with exempt organizations, see section 541.3 of this Part.)

7. (f) Corrective work receives the same tax treatment as the original work to which the corrective work relates. Thus, for example, if the original contract was a capital improvement and the contractor is required to repair windows broken in installation to make the work acceptable to a customer, the repair is considered a part of the original capital improvement contract.

   1. (1) Payments by a contractor to another contractor to perform maintenance, service and repair of real and tangible personal property when purchased to fulfill a guarantee or warranty are not subject to tax.

   2. (2) Where a contractor services real or tangible personal property and a charge is made to the customer, the charge is subject to the tax even though some of the work is performed partially under a guarantee or warranty.

      1. (i) The contractor is not entitled to a refund or credit of the tax paid on the purchase of tangible personal property used in guarantee or warranty work in the performance of a capital improvement.
      2. (ii) If the guarantee or warranty work is on a repair to real property, tangible personal property or tangible personal property that remains tangible personal property after installation, a refund or credit may be claimed by the contractor for the tax paid on the materials and parts transferred to the customer, whether or not a charge is made to the customer for the guarantee or warranty work, providing the claim is timely submitted as set forth in Part 534 of this Title. However, if any charge is made to the customer, the charge is subject to tax.

      (3)

   (g) Guarantee and warranty work.

8. (h) A contractor purchasing an existing business, or any portion of a business, or its assets, from a person required to collect tax is subject to the bulk sales provisions of the Tax Law. See Part 537 of this Title for complete information on bulk sales.

   Cross-reference:

   For detailed explanation of the application of the compensating use tax and the available or reciprocal credits, see Part 531 of this Title.

Tax Law, §§ 1101(b)(4); 1105(c)(2), (3), (5); 1115(a) (15), (16); 1119 (c)

(a)