New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter IV - Sales And Use And Other Miscellaneous Taxes › Subchapter A - Sales And Use Taxes › Part 541 - Contractors › Section 541.8 - Charges for temporary facilities at construction sites

Current through Register Vol. 46, No. 28, July 10, 2024
Tax Law, § 1105(c)(3), (5)
(a)
General.
Subcontracts to provide temporary facilities at
					 construction sites, which are a necessary prerequisite to the construction of a
					 capital improvement to real property, are considered a part of the capital
					 improvement to real property. Charges for installation of materials and the
					 labor to provide temporary heat, temporary electric service, temporary
					 protective pedestrian walkways, and temporary plumbing by a subcontractor are
					 therefore not subject to tax provided the subcontractor receives a copy of the
					 properly completed certificate of capital improvement issued by the customer to
					 the contractor.
Example:
A subcontractor agrees to furnish to the prime contractor
					 the materials and labor necessary to furnish temporary light and electrical
					 facilities throughout a building under construction so that the various trades
					 may have light, communication and power facilities necessary for them to
					 perform their work and operate their tools. The charges are a constituent part
					 of the capital improvement and are not subject to tax.
(b) The subcontractor is liable, however, for
				  the tax on the purchase of the materials used to provide the temporary
				  facilities at construction sites described in subdivision (a) of this section.
Cross-reference:
For agency contracts, see sections
					 541.2 and
					 541.5 
					 of this Part. For agency contracts with exempt organizations, see section
					 541.3 
					 of this Part.
Example 1:
A subcontractor agrees to furnish temporary site plumbing
					 service to the prime contractor engaged in the construction of an office
					 building. The subcontractor must purchase a quantity of pipes, pumps, and
					 fittings in order to provide the temporary service. The service is a
					 constituent part of the capital improvement, thus, the subcontractor's charge
					 for the temporary plumbing services are not subject to tax. However, the
					 subcontractor is liable for the tax due on his purchase of all materials needed
					 to provide the temporary plumbing service.
Example 2:
The same situation prevails as in example one, except the
					 office building is being built under an agency agreement with the contractor
					 and all subcontractors. The purchases of all materials required to provide the
					 temporary site service are subject to tax when purchased by the
					 subcontractor-agent for the principal.
(c) Charges by the utility furnishing gas,
				  electricity, refrigeration or telephone, and for the purchase of fuel for the
				  operation of any temporary site services are not part of a capital improvement
				  to real property and are subject to the applicable sales and use taxes. Guard
				  and protective services are subject to the New York City sales and use taxes
				  imposed pursuant to the authority of section 1212-A  of the Tax Law.
Example:
Electricity used to operate the temporary site electrical
					 installation service is metered and billed directly to the construction
					 contractor by the utility company supplying the electricity. Such charges are
					 not part of the capital improvement and are fully taxable to the
					 contractor/purchaser.