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January 29, 2018

     When it comes to collecting sales tax, the distinction between capital improvements and repair, maintenance, and installation services to real property is a dichotomy that impacts all contractors and their customers. In New York State, a contractor is not required to charge sales tax to its customers and is relieved from liability for any sales tax due on the work performed if the work is considered a “capital improvement”. Conversely, a contractor must charge sales tax to its customers if the work performed is considered “repair, maintenance, or installation work.” While this concept may seem straightforward, failure to accurately make this distinction can result in costly penalties an...

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