Unless a sale is exempted/excluded by the Sales and Use Tax Act, New Jersey imposes a tax of 6.625% upon the receipts from every retail sale of tangible personal property. Generally, the maintaining, servicing, or repairing of real property is taxable unless the service results in an exempt capital improvement. A repair service is a service which maintains the existing value of property. A maintenance service is a service which preserves the existing condition of property. A capital improvement is an installation of tangible personal property which results in an increase of the capital value of real property or a significant increase in the useful life of property. If a service results in an exempt capital improvement, the property owner must provide the contractor with a fully completed Certificate of Exempt Capital Improvement (Form ST-8) to claim the exemption. After Super Storm Sandy, the Division of Taxation received many inquiries regarding the taxability of sales of tangible personal property and services sold in connection with disaster recovery efforts. The Division compiled this list of frequently asked questions posed by property owners and contractors to address some of the Sales and Use tax concerns regarding the purchase of tangible personal property and services associated with disaster recovery. Frequently Asked Questions from Property Owners:
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Answer: Yes. The cleaning of household goods such as furniture, decorative items, and personal items is maintaining or servicing tangible personal property and, as such, the charges are subject to tax. For additional information see Technical Advisory Memorandum TAM-2012-3 Charges for Water Damage Restoration Services .
Answer: No. The installation of a generator which will be permanently affixed to the property is an exempt capital improvement. The property owner must issue the contractor a fully completed Certificate of Exempt Capital Improvement (Form ST-8) to document the exemption.
The three main elements of the property tax system in North Carolina are real property, personal property, and motor vehicles. Real property consists of land and buildings. Personal property consists of, for this guide, tangible personal property or all personal property that is not intangible and is not permanently affixed to real property. Motor vehicles, if registered, are assessed according to its registration renewal date.
All sales, use, consumption, distribution, storage for use or consumption, leases, and rentals of tangible personal property are taxable, unless an exemption or exclusion is provided by law for a particular transaction. In the case of service transactions, only the particular transactions enumerated in the law are taxable.
If the property you purchased is tangible personal property and is subject to sales tax as described above, then the purchase is subject to sales tax even though your vendor did not collect it. The vendor acts as an agent on behalf of the state in collecting the sales tax due. In the event the vendor does not collect the sales tax, the department may seek to collect the sales tax from the vendor or the purchaser. This issue is addressed in the court case Collector of Revenue v. J. L. Richardson Company, 247 So.2d 151 (La. App. 4th Cir. 1971), and by the definition of dealer under LAC 61:I.4301.
Transactions for the sale or purchase of tangible personal property or taxable services must be reported on the dealer's sales tax return for the month or quarter in which the sale was made, the service rendered, or the purchased property was imported into the state for use, regardless of when the proceeds of sales are collected, or when payment to the seller is required. LA R.S. 47:306(A)(2)(a) provides, however, that the reporting on sales tax returns of the gross proceeds from rentals and leases can be deferred until the dealer's sales tax return for the month or quarter in which payment is received. LA R.S. 47:303(F) provides a special rule for the remittance of the sales tax payments for memberships in health and physical fitness clubs. This statute says that the tax shall be assessed and shall be due and payable on a monthly basis computed on the amount paid each month less any actual or imputed interest or collection fees or unpaid reserve amounts not received by the health and physical fitness club.
Texas sales and use tax exempts tangible personal property that becomes an ingredient or component of an item manufactured for sale, as well as taxable services performed on a manufactured product to make it more marketable.
The exemption also applies to tangible personal property that makes a chemical or physical change in the product being manufactured and is necessary and essential in the manufacturing process. Some items, such as hand tools, are excluded from the exemption. A hammer, for example, is taxable even if it is used in fabricating a product for sale.
Semiconductor and pharmaceutical biotechnology manufacturers can claim exemption on semiconductor fabrication cleanrooms and equipment and pharmaceutical biotechnology cleanrooms and equipment. The exemption includes all tangible personal property, without regard to whether the property is an improvement to realty, that is used in a cleanroom environment and in connection with the manufacturing, processing, or fabrication of a semiconductor product or a pharmaceutical biotechnology product.
Rental or leasing tax is a privilege tax levied on the lessor for renting or leasing of tangible personal property. The gross receipts, including any rental tax invoiced, from the rental or leasing of tangible personal property are subject to the state rental tax.
As indicated, there is a defining moment at which property ceases to be tangible or transferrable. That is the moment at which it is affixed or incorporated into the permanent structure of the house. Hence forward, it is no longer personal or normally transferrable property. It is now part of the permanent real estate and, thus, no longer subject to sales tax.
The paradox here is that TPP cannot be both personal property and real property at the same time. In the case of a residential house, almost everything started as tangible personal property (two by fours, nails, water heater, dishwasher, pipe, electric cabinet, wire, faucet, sink, stove, air conditioner, etc.) that at some point, after sale or transfer and after being installed or incorporated into a house, it became so integral to the usefulness of the house, it became part of the house. It no longer retains any nature of a mobile good routinely moved, handled or sold outside of a real estate transaction.
Affixation is the primary test and must be applied consistently. It cannot depend upon your level of sophistication, age or muscular attributes. The affixed or installed items in a home which become integral to the usefulness and function of a home are make up a surprisingly finite list. There is no question or reasonable suggestion that the following items in a home, once mobile and tangible and transferred in a sale (prior to house construction or later as a replacement in a retail store or professional installer transaction), are any longer personal property once affixed and placed into a home as realty.
Conclusion. After a tangible good or piece of property has been affixed or installed into a house; will normally be transferred on a future sale of the house; is no longer treated as a personal good; and is integral to the function and usefulness of a houseit should be taxed as real property. The fact that an appliance, system or piece of property can be removed from the real estate is of no merit or consequence. Everything can be removed from a house at some point.
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