10 Rev. 3/07
Bulletin S&U-3
The sale of floor covering by a dealer and the
charge for installing floor covering are always
treated as two separate transactions. The dealer
who sells and/or installs floor covering must:
• Collect sales tax on the sales price of the
floor covering whether the dealer is doing
the installation or not; and
• Collect sales tax on the installation charge
(prior to October 1, 2006, the permanent
installation of floor covering was an
exempt capital improvement).
Materials. Since the dealer is a retailer, he treats
purchases of floor covering materials (carpeting,
tile, linoleum, etc.) as purchases for resale. The
dealer issues a Resale Certificate (Form ST-3) to
the supplier and does not pay sales tax on the
cost of the floor covering at the time of pur-
chase. The dealer then collects sales tax from
the customer (property owner, contractor, or
dealer) on the sales price of the floor covering,
unless the customer furnishes a properly com-
pleted exemption certificate (ST-3, ST-3NR,
ST-5, ST-6A, ST-6X, ST-13, or UZ-4, as appro-
priate), or unless the dealer delivers the floor
covering to the customer outside New Jersey.
See Exemption Certificates, page 11, for more
information on the proper use of New Jersey
exemption certificates.
Supplies. When a dealer uses supplies to install
floor covering, he is required to either pay sales
tax when purch
asing the supplies, or to remit use
tax on the cost of supplies if they are withdrawn
from his sales inventory. Supplies include, but
are not limited to, underlayment, nails, staples,
plywood strips, adhesive tape, and cement. The
dealer does not collect sales tax from the customer
on the cost of supplies used for the installation.
Installation. Since the capital improvement
exemption is no longer applicable, the dealer (or
contractor) must collect sales tax on the
installation charges from the property owner.
For more information on floor covering dealers
and New Jersey sales tax, see publication
ANJ-5, Floor Covering Dealers & New Jersey
Sales Tax or view Tax Notes – Floor Covering
Installation.
Landscapers
Landscapers are considered contractors because
they work on the land or buildings of others.
They follow the same New Jersey sales tax rules
as other contractors. If a landscaper’s work re-
sults in an exempt capital improvement (e.g.,
clearing land for new construction; installing
decks, patios, fountains, low voltage lighting),
the property owner issues a Certificate of Ex-
empt Capital Improvement (Form ST-8) and the
landscaper does not charge sales tax on the la-
bor portion of the bill. If the work performed by
the landscaper is a repair or maintenance (e.g.,
pruning, fertilizing, mowing), the landscaper
does charge sales tax on the labor portion of the
bill. If the work is a taxable landscaping service
(e.g., planting trees, shrubs, plants; laying sod;
seeding a lawn), the landscaper does charge
sales tax on the labor portion of the bill.
For more information about landscapers, see
publication ANJ-4, Landscapers & New Jersey
Sales Tax or view Tax Notes – Landscaping
Services.