Sales Tax and 'Big-Box' Chains

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Have a question and looking for feedback from industry peers? This month, KBDN listens in on dialogue between industry professionals as excerpted from the KitchenBathPros.com online Design Discussion Forum.

Sales Tax and 'Big-Box' Chains

QUESTION

I just found out that when our local (mid-CT) Home Depot sells countertops (installed), they do not charge sales tax. We are primarily a countertop replacement business, so this may affect me more than some others here, but it was very disturbing to find out that they charge nothing (it seems, not even a value-added tax). Is there a correlation with kitchen sales as well?
- Tom C. Mat

RESPONSE 1

There should be accountants and tax attorneys in your area that specialize in tax law. It sounds like it may be time for a free consultation, but tax laws vary everywhere. I know that here in Tennessee, we used to only have to tax materials for a job which was at least 10 years old. There was a loop hole that allowed the company to show the profit as labor and therefore not have to pay taxes on the extra monies. That hole has since been sealed. I have also heard tales in other areas where, in an effort to improve the communities, taxes were exempt on home improvements for a time. I have never known this to be the case anywhere in my area.
- BoxesEtc

RESPONSE 2

We don't charge sales tax if we install the product. Instead, we use a certificate of home improvement from the government signed off by the client.
- Bell1

RESPONSE 3

About a year or so ago, we also learned about the 'big box' stores not charging sales tax on solid surface when it was being installed. We have since started doing the same thing (here in Ohio). It turns out that our fabricators already include sales tax when they're installing the countertops. So, if you charge sales tax, the customer might be getting double-taxed. Our countertop fabricators have it written on their estimates, something like "all taxes included." Of course, if you're a fabricator and the retailer, charging tax might still need to be done in your situation.

We are currently researching sales tax on installed kitchen cabinets too, mainly because we've had several clients asking us about our sales tax. They are saying that Home Depot and Lowe's are not charging this! That means that KraftMaid or American Woodmark, for instance, would have to charge the home centers tax on the cabinetry for installed jobs only. Wouldn't that get confusing? My business partner has contacted a tax advisor – I will let you know when I hear more.
- Kompy

RESPONSE 4

I have an accountant come in every month, and we have discussed this many times as to when it is appropriate to charge sales tax on what kind of job. My state (CT) has a rather screwy tax system on home improvements.

A friendly competitor called the state Dept. of Revenue on this matter, and was told that sales tax should be charged on the countertop. When my friend told him that Home Depot was not charging tax, the Department of Revenue guy said that Home Depot was correct! If this is the case, shouldn't Home Depot at least pay a value-added tax? The accounting costs for this must be quite a burden to a smaller business, but not much (comparatively) for a larger business. This is just another case where it is harder for the small custom shop to do business.
- Tom C Mat

Installation Damage

QUESTION

Does anyone have advice on managing the construction/installation process in kitchen renovation projects? I've just now recently completed three kitchen projects, all with different contractors. They are typically complete demolition jobs ­– and smaller city kitchens. That means there's not a lot of room for workers, supplies and tools to co-exist. Do you typically remove all the doors and drawers from the installed cabinets and put them away until all is complete? How can you protect them from threat of nicks, scrapes, etc.? Between the contractor, framer, installer, plumber, tiler, electrician – lots of people in one little room over a three-month timeframe – accidents can happen. Does anyone have some advice on protecting finished components as the project progresses (not just cabinets)?
- Swanofalo

RESPONSE 1

One way to cut down on that problem is to find one installer who does all things. We have two guys that do it all. They install the cabinets, and make and install the countertops, tile backsplashes and floors, and install the appliances. This really works! Guys like these may be hard to find, but they are out there. [By using an all-purpose installer, instead of a variety of different ones], our damage is minimal.
- Patsybaby

RESPONSE 2

We do it all the time, although it does help that we have our own crews. New crews require a bit of help in learning how you like to operate. If it's possible, visiting the site when they're working can save you grief later on.

Give the contractor the heads-up that the door faces are fragile and pass the information along to the rest of the sub-contractors that are on the job site.

A good rule of thumb is to absolutely always remove drawers and doors. You can also cover the fronts with cardboard, if it's a rough and ready crew (although sometimes cardboard is no match for a tool belt!)
- KellyM

Peeling Paint From Painted Cabinets

QUESTION

Are any of you experiencing paint peeling from cabinetry around sink bases and garbage pull-outs?

Based on my experience, I have had customers with peeling paint around the wet areas of the kitchen regardless of who manufactured the cabinets. The biggest offenders are kitchens with farm sinks. The problems usually pop up within two to three years after installation.

How do you handle this? Do you replace the doors at no charge and refinish the frames? Or do you tell them, "Sorry, this is painted cabinetry!"?

We try to warn clients about the interaction of painted cabinetry and water, but how do you impress upon them the reality that the paint will fall off of their cabinetry if they don't keep water off their cabinetry?

I have had equal complaints with lines ranging from high-end to builder lines and everything in between.

I have a white-painted, beaded inset set in my own home. I'm crazy about keeping them dry to the point that my wife thinks I'm nuts. The cabinets are going on three years old and I just noticed paint lifting from the corner of one door. So I know that this is going to happen in my clients' homes as well.
- Boxesonawall

RESPONSE 1

Wow, this is an eye opener! Over 20 years, I've not had anyone complain about this.

How would I deal with it? First, I would check with the manufacturer to see if they would remake or repaint the doors. Also, is it possible to repaint a door properly if it gets wet over time? How long would it need to be dried out? I suppose the moisture content would need to be checked before repainting. Or totally new doors made would have to be made.

If it's on the frame work, then I would see if the manufacturer could send us a touch up paint kit.

As far as the labor involved, I suppose I would take care of that if the cabinets were under six or seven years old, but any older than that, and I would charge them for the labor.

From now on, I will make sure to warn people about keeping those areas dry. I have been accused by designers that I give away too much information and detail, and yet I will still get a client that complains that I haven't told them enough!"
- Kompy

RESPONSE 2

I've sold a heap of painted cabinetry and I've never had anyone call me about the finish flaking off. The closest I ever came was when I had a client call for me to check out the paint, because she said it was coming off. When I got there it was, but only on the outside edge of the doors on the sink and trash cabinet. Upon further investigation, I found out that she was "wiping" the cabinets down with one of those green teflon scrubbies! After giving her a thorough scolding and educating her about the proper cleaners and cloths to use, I reordered the doors for her. I did make it known though that I would only do that one time.
- DesignDiva

RESPONSE 3

I can't believe none of you have experienced this! I have been in the cabinet business for six years and have probably observed at least 12 kitchens with similar conditions.

I wish the problem was brand specific, but it has occurred in stock lines, semi-custom, and custom – all good, name branded and recognized manufacturers. It always happens around the sink and pull-out trash.

I have had manufacturers' reps out at many jobs, and they have agreed to replace doors and drawers, and sometimes send labor to re-finish on-site.

I'm now definitely gun-shy about selling painted cabinetry. So many clients request it, and we need to educate them without scaring them. But ultimately, it is my time, labor, effort and dollars lost in the fix – not to mention my reputation.

In fact, I was just showing this post to someone I work with who has more than 20 years experience in the industry. They said it has definitely been a problem that seems to be occurring on a more frequent basis. This leads me to wonder about the paints and finishes being used.

If I'm not mistaken, hasn't the EPA cracked down on VOCs, etc.? I wonder if it has to do with latex- based paints and finishes.
- Boxesonawall

Hovering Client

QUESTION

We have had the "hovering, helpful client" here lately. That is, the client that either sets up the lawn chair and pops popcorn and watches the "installation show," or the handy helper who offers to hold the tape, or level or tool.

Our one installer has had two of these people this month and is fed up! His usual line of "I charge if you help" hasn't worked either.

It's difficult to tell homeowners that they are in the way in their own home. Any suggestions from those facing similar issues are welcome.
- pischi

RESPONSE 1

Often, we are dealing with heavy sheets of stone, and we warn the clients that they need to give wide berth to the installers throughout the phases of the installation and templating process.

We also tell them that if they are in the way, then the site becomes more dangerous. This usually gets them to stay away.
- Bell1

RESPONSE 2

A few years ago, I had clients who liked to stay in the kitchen and watch the installation. The wife and kid were there all the time and the husband would come home from work every day for lunch. They would set up snack tables and eat their lunch while they watched me install their kitchen. I generally don't stop for lunch, preferring to end my day a half hour earlier.

One day, the electrician was on the job at lunch time and he needed to kill a lighting circuit. Rather than go down to the basement to shut off the breaker, he just touched the wires together to short it out, and for some reason, the ensuing flash was huge and was followed by a large crash.

We turned around to see that our audience was so frightened by the sparks that they had all leaped to their feet, overturning the snack tables and dumping their lunches. Their faces had gone white and their eyes were wide open. After that, they were considerable less interested in the installation process!

I gave the electrician $20.

Another time I had a woman who sat in the kitchen all day, every day, holding a vicious dog on a short leash because "Rover" didn't like to be put in the bedroom and he barked constantly if they put him outside.
- dcdci

RESPONSE 3

You might want to try putting up barriers (such as plastic dropped from the ceiling works), and claiming insurance reasons, or employment or code issues. Most homeowners don't know insurance, employment and building codes for this trade. Just make sure they know that your insurance/employment codes/building codes don't allow non-employees to enter the "work zone."

Tell them right away and let them know that if they need to get into the room, they should notify you so that you can secure the area.
- Tinkerbell

RESPONSE 4

For the most part, I don't really mind if the client wants to watch. When they want to help, though, it's a different matter. The insurance excuse is a good idea.

I have also had some success in running them off by making them feel that they are in the way. As I work around the kitchen, I make sure the client is forced to constantly move out of my way. It usually doesn't take too long for him to realize that things will get done more efficiently if he stays out of the work area.

If that doesn't work, I politely explain that I've developed a system for installing, and while I appreciate his wanting to help out, the system works better if I'm allowed to follow it on my own.
- dcdci

Uneven Ceiling

QUESTION

I'm currently installing a kitchen that is designed to go to the ceiling. The flooring is Mexican tile (Saltillo), which tends to be a bit uneven. The other issue with this project is that the ceiling is not level either. I should also point out that I have up to 3/4" gaps.

My initial thought was to not go all the way up, but the client has indicated that they don't want that. Any suggestions?
- Veronika

RESPONSE 1

If she insists on having it all the way up, disclose it now that you cannot guarantee her crown molding will line up evenly from end to end and that gaps of 3/4" are predicted based on her "pre-existing ceiling" conditions.

Then, I would make her sign off on it. I guarantee if you don't do this, she will complain about the gap later and expect you to fix it at no charge.

If she really wants to take it to the ceiling, she will need a drywaller to skim coat the ceiling.

But 3/4" is a huge amount of space – too much for a skim coat.

Have you thought about showing her pictures with accent lighting above the cabinets?
- laurie1216

RESPONSE 2

Never, ever expect cabinets to go to ceiling. In the real world, ceilings are not perfectly level.

Therefore, we always plan at least solid stock and crown. That way, the crown can float up and down on the solid stock.

In an eight-foot kitchen, we install cabinets at 90", with rope, solid stock and then crown, leaving about 2" between the rope and crown. This gives us some adjustability and flexibility for the ceiling.
- ootb

RESPONSE 3

I've had a few severe situations where my installer added some slivers of wood above the crown to fit. He used sort of wedge shapes where necessary, because he fits the crown to be level, regardless of the ceiling.

Otherwise, you will find that it's a nightmare with the mitres. That worked very well for us in the past, although it can be labor intensive to do.
- Susanckd

RESPONSE 4

I had a kitchen with a 1" drop within a 48" area. We installed the combination crown molding level and then talked the clients into paying for a plasterer to fill in the voids between the crown and the ceiling.

He then proceeded to feather out from the crown molding. The kitchen turned out perfectly!

One other helpful thing to keep in mind is that plaster can be built up much thicker than drywall mud. I hope this helps.
- jborch

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