N.Y. Comp. Codes R. & Regs. tit. 20 § 541.8

Current through Register Vol. 46, No. 18, May 1, 2024

Section 541.8 - Charges for temporary facilities at construction sites

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.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 541.8