Sales Tax Articles
Sales Tax State Activity Update - August 2006
New York Pulls the Rug Out on Carpeting Installation
The New York State Department of Taxation and Finance recently ruled the sale and installation of wall-to-wall carpeting was a taxable activity because it did not qualify as a capital improvement to real property.
A taxpayer contracted for a renovation to an existing building. The renovation included removing interior walls and carpeting and erecting new walls and installing new carpet.
New York sales and use tax statutes and regulations indicate the installation of floor coverings are exempt when all the following criteria are met:
- The installation must be of the initial finished floor covering; and the installation must be made in:
- (a) The new construction of a building or structure; or
- (b) The new construction of an addition to an existing building or structure;
- (c) The total reconstruction of an existing building or structure.
Since the building renovations did not meet the criteria set forth to qualify for new or total reconstruction, the carpet installation was not an exempt capital improvement to real property.
View the full text on the New York State Department of Taxation and Finance website.
(New York Department of Taxation and Finance Advisory Opinion TSB-A-06(19)S, June 26, 2006)
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