Questions - sales tax / license issue / comment on VIvint

                                                                         December 29, 2012
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Sales Tax Question
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Hello Ken,
   A client of mine who owns a security company has purchased a standard alarm sales/monitoring/service contract from your firm. He noticed the sales tax language and lines that add sales tax to the invoice. He has asked me if he should be charging sales tax on the installation of the alarm system?
   I have read NYS TSB-A-04(5)S dated 2.27.2004 from the NYS sales tax department. I have come to the conclusion that if the installation is considered a "capital improvement" then sales tax would not be charged on the installation (both equipment and labor). However, my client must pay sales tax to the vendor when he purchases the equipment. If the installation is not determined to be a capital improvement, then my client should charge them sales tax and not pay sales tax to the vendor upon purchase of the materials.
   Would you agree?
Thanks,
William E. Mancini, CPA
Amherst, NY
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Answer
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   The alarm contract provides that the installed equipment remain personal property which would mean the equipment would not be a capital improvement. That provision is for liability issues which I won't get into in this article. For tax purposes the tax dept is going to make it's own determination whether the installation is a capital improvement, in which event it would not get taxed. Your client should get capital improvement certificates from the home owners and not charge the tax. If not certificate, then charge the tax. Monitoring and service charges are subject to sales tax.
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Licensing Question
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Ken
   Our company is looking into monitoring accounts in the state of Texas and Florida, we are based in North Carolina. Are we required to obtain an alarm license for the state of Texas and Florida.
Thank You
EC
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Answer
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   Yes for Florida and yes for Texas. Contact our License Compliance department for assistance: call Jennifer Kirschenbaum,Esq. 516 747 6700 ext 302, or better yet, wait until you are charged with non compliance with the alarm license, then you can call me !!
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Comment on VIvint
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How ironic, Vivint crying foul over someone poaching their customers.
Jon
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Questions - Sales Tax / License Issue / Comment on VIvint - December 29, 2012