New York Exempts Scaffold Systems Used For Capital Improvements

Monday, November 3rd, 2014

A construction worker standing on a scaffold.
New York

The New York Department of Taxation and Finance recently released a technical memo explaining how sales tax applies to scaffolding systems used for exempt capital improvements.

Generally, scaffolding systems are taxable as a combination of taxable goods and taxable services. Scaffolding systems are fixed structures that support, protect, or convey people or materials during the construction or repair of buildings and other real property. Scaffolding services are used for taxable maintenance and repair and for exempt capital improvements. To be exempt, capital improvements must (1) substantially add to the property's value or prolong its life, (2) be permanently affixed to the property, and (3) be intended as a permanent installation. If the end result of an improvement is merely the repair or maintenance of property, the improvement is not exempt.

Scaffolding systems used in exempt capital improvements are needed for the capital improvement. Thus, they are part of the capital improvement and are exempt from tax. The scaffold provider must receive a copy of the completed certificate of capital improvement issued by the customer to the contractor. Also, the initial purchase of materials by the service provider is still subject to tax. Scaffolding systems used for ordinary property repair and maintenance, such as painting, remain taxable.

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