Does Your Construction Business Have a NY or NJ Sales/Use Tax Issue?

Does your construction business perform services in New York or New Jersey or both? Have either of these state taxing authorities conducted a sales and use tax exam on your business?

New York and New Jersey have been actively examining construction businesses and the stakes can be very high if sales or use taxes have not been properly paid. Proactively looking at purchases, sales, and company procedures for obtaining exemption certificates have minimized taxes paid by our construction clients.

We have identified below some of the top questions raised during exams that have allowed us to identify potential foreseeable issues:

  1. Does your business regularly obtain fully complete capital improvement certificates from owners or lessors on new construction projects?
  2. Do you charge sales tax on repair, maintenance, landscaping or fire alarm services?
  3. Do you pay sales tax when you rent equipment, even on jobs for the government?
  4. Does your company buy products in NJ and deliver them in your own trucks to a tax-exempt job in New York?
  5. Did you purchase security services at your construction site and not pay sales tax on these purchases?
  6. Did a vendor sell software for business use in NJ or NY and not charge sales tax on a taxable sale?
  7. Do you pay sales tax on tools and supplies?
  8. Are you registered for sales tax in NY or NJ? Registering for sales tax can be important because it can limit the number of years that a taxing authority can assess taxes.

After reviewing these issues, feel free to contact your Sax advisor or Peggy Tilles at [email protected] with any questions.