The tax shall not be added to the agreed-upon price as a separate charge on the invoice but shall be included in the computation of the cost of the materials necessary to perform the contract. The agreement does not involve the customer agreeing to purchase a certain number of yards of carpet but instead involves the installation of a sufficient quantity of floor covering to cover the desired area. In performing the contract, the responsibility for the job until it is completed, accepted and turned over to the purchaser or owner generally rests upon the contractor. The contractor generally will have the responsibility and liability for accidents or injury at the job site as well as any liability for loss or damage due to acts of vandalism, neglect, theft, and fire. Retailers entering into performance contracts, as described in this Bulletin, with customers will be considered contractors and only liable for tax on the cost price of the carpet and other materials purchased for use in the performance of those contracts to be paid to the Secretary of Revenue on their sales and use tax returns.
Contractors are therefore liable for payment of tax on their purchases of such property.
The charge for materials and labor may be shown separately in the job cost file but shall not be shown separately on the customer's invoice. The tax shall not be added to the agreed-upon price as a separate charge on the invoice but shall be included in the computation of the cost of the materials necessary to perform the contract. Sales by Plumbing, Heating, Air Conditioning and Electrical Contractors Contractors who do not sell at retail in the regular course of business are not required to collect tax by reason of occasional or isolated retail sales. However, those contractors who have not been classified as retailer-contractors, but who regularly or consistently make retail sales are liable for collecting and remitting the tax on the sales price of the property. Contractors making sales of this nature must register with the Department and pay tax monthly on such sales.