N.J. Admin. Code § 18:24-5.11

Current through Register Vol. 56, No. 11, June 3, 2024

Section 18:24-5.11 - Fabricator/contractor sale and installation of completed products; tax

(a) Where a fabricator/contractor sells his or her fabricated product, and as a part of that sale agrees to install the product at a location in this State, he or she may not collect tax from his or her customer for installation charges if the installation of his or her product results in an exempt capital improvement to real property. In such cases, the fabricator/contractor is, however, required to pay use tax directly to the Division of Taxation upon the value of his or her product. The use tax shall be computed on:

1. The price at which items of the same kind are offered for sale by him or her; or

2. If the fabricator/contractor makes no sales of items of the same kind, the tax shall be computed on the cost of all materials used in fabrication.

(b) A fabricator/contractor who sells his or her fabricated product, and as a part of that sale agrees to install the product at a location in this State, is required to pay use tax on the product installed, in the same manner as described in (a) above, and is further required to collect the sales tax on that portion of the bill attributable to installation charges, unless the installation results in an exempt capital improvement.

(c) Where a fabricator/contractor sells his or her fabricated product, and as a part of that sale agrees to install the product at a location outside this State, he or she is not responsible for the payment of use tax as provided in (a) above or the collection of sales tax on installation charges as provided in (b) above.

Example: A structural steel fabricator purchases steel which is delivered to his or her facility in New Jersey. The steel is fabricated as provided in shop drawing specifications for on-site installation. The fabricated structural steel is then shipped to a job site located outside this State. Such fabricated steel is not subject to tax in this State.

N.J. Admin. Code § 18:24-5.11

Amended by 48 N.J.R. 824(a), effective 5/16/2016