Running the Business · Module 2

Sales tax for contractors: materials vs. fixtures. The CDTFA rule most plumbers get wrong

California treats a plumber as two different taxpayers depending on what is being installed. For materials, pipe, fittings, valves, solder, you are the consumer: you pay sales tax to the supply house and you do not charge the customer tax. For fixtures, water heaters, toilets, faucets, disposals, water softeners, you are the retailer: the state wants tax on what you sell the fixture for, and if your contract is a lump sum, on what the fixture cost you. Get this backwards in either direction and you are either overcharging customers with a tax you have no permit to collect, or under-reporting to the CDTFA and building an audit liability. This lesson gives the rule, the two lists, the seller's permit question, and how to write invoices so the numbers come out right.