Taxed or not?

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Oakey

Oakey

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New Jersey
Hi guys, I am doing a federal pacific rip out and replace for a home, same amperage, updating grounds, reusing service cable and meter, etc..Would this be considered an nontaxable upgrade or a taxable repair.:confused: Thx for any help.
 
Oakey said:
Hi guys, I am doing a federal pacific rip out and replace for a home, same amperage, updating grounds, reusing service cable and meter, etc..Would this be considered an nontaxable upgrade or a taxable repair.:confused: Thx for any help.
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Talk to your CPA for that advice.
 
I'd say it's a "repair".

Nothing is actually being "upgraded".

How is that the grounding is not correct and needs attention?
 
For state sales tax, you mean :confused: I'm confused.
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Yes NJ state sales tax. Sorry I should have specified.
Talk to your CPA for that advice.
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Good idea, unfortunately for me this is my third CPA and she is almost as clueless as the first two.
I'd say it's a "repair".
How is that the grounding is not correct and needs attention?
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Yea I guess it is a repair but the customer was griping and I wanted another opinion from what other EC's would do.
I am under the impression that when you swap a panel that the grounds need to be brought up to current code. Am I wrong?
 
Oakey said:
I am under the impression that when you swap a panel that the grounds need to be brought up to current code. Am I wrong?
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You might be...but I wouldn't use the word "wrong" here, rather misinformed, but check with the AHJ.

I am NOT sure that the wonderful Rehab Code would apply here, but more importantly...did the grounding requirements ever change (barring the extra ground rod). For example, was there ever a time when you did not need a #4CU to the water and a #6 CU to the rod for a 200A service?

What grounds are you specifically referring to? (I'm curious)
While we're at it, how about the size of the grounds and service size, too :D
 
It is an existing 200 amp service.
I was under the impression that I needed to
  1. Drive in additional rod.
  2. Bond the water heater.
  3. Since most old panels around here only have the water meter wire run to one side of the meter I thought I need to run one that would be long enough to jump to both sides of it( no splices). If existing wire is the right size would just a jumper do?:confused:
 
I would do exactly as you have done - altthough there has been some debate over item #2 - and tax the whole job as a "repair". Honestly, how much "extra" tax are we talking about fot the grounding impovements - $10?
 
You're changing the breaker panel, installing an additional rod, bonding the water heater and re-bonding to the water main. Call it what you want but the long and short version of this is that it's a service upgrade even though you're not increasing the amperage. In my opinion this is a capital improvement and you should fill out an ST-8 form (you can get the forms in PDF format on line at the state website). You're already paying sales tax on the material you buy so unless you want to break out your labor (the only item left to tax) on your bill, I would bill it as Total labor and material and not charge your customer any additional taxes.

I'm surprised your accountant doesn't know this. You can contact your state taxation office and they can advise you. I don't know where you are in NJ but there's a State of NJ tax office on Route 208 in Fairlawn. If you're close enough stop in and they'll help you.
 
Oakey said:
It is an existing 200 amp service.
I was under the impression that I needed to
  1. Drive in additional rod.
  2. Bond the water heater.
  3. Since most old panels around here only have the water meter wire run to one side of the meter I thought I need to run one that would be long enough to jump to both sides of it( no splices). If existing wire is the right size would just a jumper do?:confused:
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1. not sure if you are required in this application but it won't hurt.
2. If you mean bonding the hot and cold at the water heater there is no NEC requirement for this, some misguided inspectors think there is but as long as the hot and cold are joined at some point (tub valve) you are ok
3. Just add a bonding jumper around the meter.

NEC wise I would say just changing out a panel means just that, change out the panel. As long as you install the panel properly you need go no further. In reality where would you stop?
 
electricmanscott said:
If you mean bonding the hot and cold at the water heater there is no NEC requirement for this
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You're right but we're still doing that here in NJ. (We're a little antiquated here and frankly I'm surprised we adoped the 2005 NEC in 2005. It usually takes us a few years to mull over what we should be doing). Still can't figure out why but it's worth the few extra $$$ to do jump out the water heater and avoid a red sticker and a trip back to the job. And, as if that wasn't bad enough some inspectors will require you to size the bonding jumper wire in accordance with the largest conductor size of the service. So, if you're installing a 200 amp service you'll have to use # 4 AWG copper. Go figure !!! The term likely to become energized seems to come up often when I confront inspectors about this but they insist on us installing the jumper. I wish someone could give me a scenario where a 200 amp service conductor would likely energize a water line.
 
This is America in 2007 EVERYTHING IS TAXABLE, items that are not taxable are listed below under NON TAXABLE.


ITEMS THAT ARE NOT TAXABLE UNDER CURRENT IRS CODES
1. NOTHING
 
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I agree with Goldstar, this is a capital improvement and not subject to sales tax. Just get them to fill out the ST-8 as mentioned.
 
bikeindy said:
SO GLAD I live in Indiana. how many different kinds of taxes you got over there next to the pond?
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We have a tax for everything...if there isn't tax, we make one ~ it's a perfect system (perfect for what, I'll leave up to you to decide )
 
I could be wrong but I thought I read somewhere New York was the most taxed state or maybe had the most different taxes, either way they are after your hard earned money.
 
I guess as long as they don't tax the tea you New Englanders will pay it. I am trying to get over the increases in permit prices here it just makes me mad and I think we are probably low compared to most.
 
I am a new EC in NJ ( 3 mo's) and I will be seeing my cpa very soon, but until then, can some one clarify when my customers and I should be filling out a st-8 form? Should I be doing this here in nj for all of my electrical work?
 
While researching the question below, it would seem that a very large portion of what we do as EC's is considered an "exempt capitial improvement"...such as the OPs service change.

kmc said:
I am a new EC in NJ ( 3 mo's) and I will be seeing my cpa very soon, but until then, can some one clarify when my customers and I should be filling out a st-8 form? Should I be doing this here in nj for all of my electrical work?
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[ NJ ST-8 Form]

On this form, it is noted:
TO THE PROPERTY OWNER:
In cases where the contractor performs work which results in an exempt capital improvement to your house or land (real property), he may NOT charge you any sales tax if you issue to him a properly completed Certificate of Exempt Capital Improvement (Form ST-8).
It is important to distinguish between an exempt capital improvement and a taxable capital improvement, repair or installation. If the fulfillment of a contract only maintains the existing value of the property, it is a repair and not a capital improvement. Where an improvement results in an increase in the capital value of the real property, it is generally considered that a capital improvement has been performed. (But see below list of taxable capital improvements.)
As an aid to determine whether a contract is for a repair to real property or a capital improvement to real property, the treatment of such transaction for income tax purposes under the Federal Internal Revenue Code may be used as a guide. If you have any doubt whether the work to be performed constitutes a repair or an exempt capital improvement, you should communicate with the Division of Taxation and describe in detail such work.
The following are examples of exempt capital improvements:
Rewiring
New electrical outlets installed

FOR MORE INFORMATION:
Call the Customer Service Center (609) 292-6400. Send an e-mail to nj.taxation@treas.state.nj.us. Write to: New Jersey Division of Taxation, Information and Publications Branch, PO Box 281, Trenton, NJ 08695-0281.
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This is only a PARTIAL copy of the form
 
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