Sales Tax Articles
Sales Tax State Activity Update - July 2006
New York Stands behind Use Tax on Modular Home Installation
The New York State Department of Taxation and Finance recently issued an Advisory Opinion indicating that a modular home manufacturer and its third party installer were liable for the use tax on the materials used to install modular homes.
Background
A dealer of modular homes entered into an agreement with a property owner for the sale and installation of a manufactured home. In order to fulfill this agreement, the dealer entered into a separate agreement with the manufacturer to provide and install the modular home components on the property owner's building site. The manufacturer constructs the modular home components and contracts with a third party to install the components on the property owner's site.
Advisory Opinion
The Office of Tax Policy indicates that the installation of the modular home is a capital improvement and sales tax is not charged to the purchaser of the modular home. (i.e. property owner).
The property owner must issue the dealer a Capital Improvement Certificate to relieve themselves of their sales tax obligation. The dealer should provide the certificate to the manufacturer who in turn issues it to his subcontractors so that subcontractor and manufacturer are relieved of obligation to charge sales tax on their services. The subcontractors and manufacturer are liable for sales or use tax on the materials purchased and used to install the modular homes. In addition, the manufacturer is liable for use tax on the manufactured components installed pursuant to the contract with the dealer.
View the full advisory opinion on the New York State Department of Taxation and Finance website.
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