Sales Tax Solutions 2000

Furniture reupholstering generally involves sales of materials as well as fabrication, repair, and installation labor. Sales tax applies to your charges for materials and parts such as fabric, foam rubber, springs, cushions, legs, and casters. Tax also applies to your charges for items commonly referred to as “findings.” These items include merchandise with small unit values such as brads, buttons, tacks, twine, and thread. You may choose to either itemize your charge for findings or use the alternative invoicing method described later. When you reupholster furniture, your charges for cutting and sewing materials for coverings, including seat and back cushions, are taxable fabrication labor. However, stripping old materials, applying new materials, retying springs, and refinishing or applying faux finishes are nontaxable repair labor. Invoicing Options You may use one of two methods to invoice your clients for reupholstery work. You may either: Itemize your charge for all materials and...

When you fabricate and then install new draperies, all labor up to the point of installation is taxable fabrication labor. This includes taking measurements at the client’s premises, cutting and sewing fabric, fireproofing or otherwise treating the fabric or other materials, shirring, lining, pleating, and pressing. The amount you charge for hanging the draperies is nontaxable installation labor and should be itemized as such on your invoice. Your charges for the draperies themselves and any installation hardware, including rods, brackets etc., are taxable. Clients may also contract with you to have their draperies cleaned, resized, relined, fireproofed, and installed at a new location. All of these services would be nontaxable repair and installation labor. Only the selling price of the lining and charges for installation hardware would be taxable. Source: California Department of Tax & Fee Administration (CDTFA) Course: https://salestaxsolutions2000.com/california-sales-tax-...

Installation labor is the labor required to install an item after it has been delivered to the client’s premises. It does not include any work performed prior to installation. Charges for installation labor are not taxable. However, tax generally applies to charges for materials you provide in installing a product, such as nails, bolts, screws, cables, etc. Examples of exempt installation labor include: Hanging draperies after delivery to the job site. Hanging paintings and other artwork. Connecting an appliance to a power source. Source: California Department of Tax & Fee Administration (CDTFA) Course: https://salestaxsolutions2000.com/california-sales-tax-interior-designers

Repair labor is the repairing, refinishing, or reconditioning of an item to refit or restore it for its original use. Alteration of used items includes mending, shortening or lengthening, taking in or letting out, or otherwise altering used items such as bedding, draperies, or other personal and household items. When your alterations merely refit or repair an item for which the item was created or produced, charges for the alteration of used items are not subject to tax. Examples of nontaxable repair labor include: Refinishing or putting a faux finish on a client’s antique table. Cleaning a client’s used rug. Dyeing a client’s used rug. Relining old draperies.                                                                                              ...

When you make a new item or change the form or function of an existing item and then sell it to your client, the labor is considered fabrication labor. Alteration of new items includes any work performed upon new items such as garments, bedding, draperies, or other personal and household items to meet the requirements of your customer. Your work may involve adding or removing material from the item, rearranging, restyling or otherwise altering the item.   Alterations such as these, result in the creation or production of a new item or constitute a step in the creation or production of a new item for your customer. Tax applies to your charges for fabrication labor whether you provide the materials or use materials provided by your client. Examples of taxable fabrication labor include: Quilting new fabric. Converting a vase to a lamp. Making bedspreads, draperies, slip covers, and pillows from fabric provided by you or your client. Making an area rug from carpet remnants....

You may also charge your clients for labor associated with a taxable sale. For purposes of calculating sales tax, labor charges are generally divided into three basic categories: fabrication, repair, and installation. In general, tax applies to charges for fabrication labor, but not to charges for labor considered repair or installation. Nontaxable labor charges should be itemized separately on your invoice. Source: California Department of Tax & Fee Administration (CDTFA) Course:   https://salestaxsolutions2000.com/california-sales-tax-interior-designers

Many designers and decorators charge a fee for professional services. Typical services include consulting, design, layout, selection of color schemes, coordinating furniture and fabrics, supervising installations, etc. The fee may be a negotiated fixed amount or a percentage of the selling price of furnishings, labor, and installation charges. Tax does not apply to charges for professional services that are not directly related to the sale of merchandise. Be sure to list those charges separately on your invoice. However, tax does apply to your charges for fees that are directly related to acquiring and providing furnishings and other merchandise you sell to a client. For example, when you charge fees to accompany a client to a showroom to select furniture the client is buying from you, those fees are taxable. Normally, an interior decorator’s selling price of furnishings should be the retail price — that is, the cost to the decorator plus a reasonable markup. However, decorators so...

You generally must pay sales tax on the sale of merchandise to your clients, including the sale of samples and finished drawings or plans you transfer to clients.  You owe tax based on the retail selling price of the merchandise, including your markup and any related taxable labor and service charges. Special tax rules apply to the sale of items that you or a subcontractor attach to real property (houses, apartments, commercial buildings, etc.), including carpeting, wallpaper, paint, and cabinets. Source: California Department of Tax & Fee Administration (CDTFA) Course: https://salestaxsolutions2000.com/california-sales-tax-interior-designers