Example: A customer buys a laptop in Store A and also buys a service contract that is offered at the checkout. The cost of the service contract will be added to the cost of the laptop, and the total amount will be subject to VAT at the rate applicable in the A. 2 store. Contracts for parts only. Maintenance contracts, which provide exclusively for the installation or replacement of parts and not the work, constitute a sale of personal material property. The customer`s total charge for pure parts contracts is taxable. Persons who supply spare parts may purchase these parts as part of an exemption resale certificate. Example: Buyer A purchases a maintenance contract from Seller B that only provides for repairs and spare parts. The contract stipulates that all repair work will be invoiced separately to the buyer on the basis of an hourly rate. This contract is a pure parts contract and is 100% taxable. Repair parts and labor for off-road vehicles typically require sales tax.

If an optional or mandatory warranty provides that the customer pays a deductible for repairs and services provided under the warranty (unless otherwise specified in the warranty agreement), the dealer/workshop shall also pay VAT on a portion of the revenue from the sale of parts and excise duties at its expense. 5. Extended Warranty Plans. With the exception of extended warranty plans issued by licensed insurance companies, the tax applies to the costs of extended warranty plans that provide for the supply of repair parts and labor. The application of the tax to extended warranty plans is calculated in the same way as maintenance contracts in this subsection. Extended warranty plans issued by an insurance company regulated by the Insurance Bureau of the Crown Corporations Commission are insurance transactions and are not subject to tax. For more information about repairs in general, see 23VAC10-210-3050. 3. Documents and employment contracts. Maintenance contracts for the supply of repairs or spare parts and repair work are a combination of taxable sales and non-taxable services. Since it is impossible to determine in advance the percentages of work and parts supplied under the contract, the contract is considered a contract for half of the work and half of the parties, regardless of the percentages of work and parts actually supplied under the contract.

Thus, half of the total burden of such a contract is subject to tax. Persons who perform maintenance in accordance with these contracts may purchase repair or spare parts under an exemption resale certificate, but are liable for tax on all items purchased for their personal use and consumption when carrying out repairs or maintenance. 4. Maintenance costs after work. Any additional charges for post-renewal or after-hours maintenance based on a percentage or supplement to the standard maintenance contract are taxable in the same way as the contract on which the additional costs are based. 1. Employment contracts only. Maintenance contracts that exclusively provide for the provision of repair work are service contracts and the fees for these contracts are not taxable. This includes software maintenance contracts, services, i.e. Providing updates, revisions, exchanges and programming, by electronic means such as online downloads or online remote access. Persons who provide repair services under these contracts are subject to tax on all goods used and consumed in the supply of their services. Service contracts can also be sold by third parties directly to consumers after the purchase of an item.

Third-party service contracts are often purchased by consumers at the time the original manufacturer`s warranty for an item is about to expire. These sales are also subject to sales tax, and the applicable tax rate is the combined state and local rate applicable to the location of the property covered by the service agreement, not the rate applicable to the seller`s location. Service providers registered as sellers in New York State may purchase repair services from third-party repair shops without paying New York sales tax by submitting Form ST-120, Certificate of Resale, to the repair shop. However, non-registered service contract providers cannot use Form ST-120 and must pay sales tax on fees for the work performed. An optional warranty or maintenance contract is a contract that your customer can purchase for an additional fee. If your customer can purchase the product without purchasing the warranty from you, the warranty is optional. Separate fees for optional benefits are generally not taxable (exception: see Optional Software Maintenance Contracts below). Examples of optional warranties include an extended repair warranty for a computer or electronic device, an extended mileage warranty for a car, and a maintenance plan for a refrigerator. Optional service contracts offer prepaid coverage for things like scheduled oil changes and tire rotations. These contracts are taxable if they contain taxable elements, unless the cost of these items is insignificant (less than 10% of the total contract price). The manufacturer is considered the consumer of the repair parts for work performed under an optional manufacturer`s warranty. If you are a retailer/repairer performing a repair under an optional manufacturer`s warranty, retail the parts to the manufacturer.

You must declare the retail price of the parts (your cost plus extra) and pay sales tax. Persons who sell maintenance contracts and work within the meaning of the agreement are not subject to retail sale or excise duty on materials or work that are part of the service or repair required. During the tax reporting period, the customer brings the vehicle for scheduled maintenance, the dealer must report the $60 under the Wholesaling B&O tax classification The amount that the customer who is not covered by the maintenance contract must pay is subject to the B&O retail tax and the retail sales tax must be collected. Note: In this example, the guarantee does not require the customer to pay VAT on the taxable portion of the deductible. If that were the case, you would charge the customer $51.55 and the manufacturer $150. “Maintenance Contract” means an agreement by which a person undertakes to maintain or repair important personal property for a specified period of time for a fee determined at the time of entering into the Agreement. A maintenance contract can only provide for work, only parts or work and parts. Many retailers sell service contracts at checkout at the time of sale of the goods. These sales are subject to VAT, even if the retailer himself: subcontractors who carry out work under a maintenance contract for the seller of such a contract, make wholesale sales. This subcontractor must obtain a reseller authorization. For sales after 1 January 2010, the resale certificate was replaced by the reseller authorisation. For more information, see Reseller Approvals.

If a contract contains warranty provisions, but also requires the periodic services of a maintenance contract, it is taxed as a maintenance contract. If the service provider is located outside of New York State and has customers in New York State, the service provider may be required to register as a seller for New York State VAT purposes. In most cases, an out-of-state contract supplier has retailers or repair centers in New York State where customers bring or ship items covered by a service contract to be repaired or replaced. These New York-based retailers and repair centers are considered agents or service providers of the non-state contract supplier. Therefore, the contract seller must register as a sales tax seller and collect and remit sales tax on its contracts for the sale of services in the State of New York. See tax slips Do I have to register for VAT? (TB-ST-175) and How to Register for New York State Sales Tax (TB-ST-360) and TSB-M-09(3)S, Definition of a Sales Tax Supplier will be expanded to include out-of-state sellers with related businesses in New York State for more information. .