Tax Setup for Flat Rate Residential Service Work in CT

isherman
New Contributor

I'm wondering how other flat-rate HVAC / Plumbing companies in Connecticut set up their taxes in ServiceTitan. Should a flat rate service company setup a tax zone with a material tax rate or service tax rate of 6.35%? 

The problem is, with enhanced sales tax, when exporting invoices assigned to a residential sales tax zone that charges a material tax rate of 6.35%, the tax will not calculate in QB because the materials are not marked as chargeable. 

Has any flat rate HVAC / Plumbing companies in Connecticut experienced a similar issue? How did you all resolve this?

2 REPLIES 2

JessicaSmith
ServiceTitan Certified Administrator
ServiceTitan Certified Administrator

It's been a year or so since I had to think about CT tax, but my previous company did work in both CT and MA. MA we only had to tax chargeable materials, CT we had to tax everything. I just charged 6.35% on the flat rate task in CT and my accountant told me that was sufficient.

Disclaimer: I am not an accountant and time causes memory to fade... so I could be wrong... but it might be a good question to take to your accountant!


Jessica Woodruff Smith, LadyTitans Co-Founder & Process Manager at AirWorks Solutions

rstare
Contributor

Also not a tax accountant - so defintely check with a CPA - and only speaking from my understandings within the state of Illinois. But there is no requirement to change tax on materials within a flat rate service. However, when we were time and material, we were required to change tax on material. Service work was not taxable. When switching to flat rate, I always explain it as a shift in thinking. The materials are now "tools" used to complete work - they are no longer items that we are selling to the customers, therefore WE are the end users of the material, therefore WE (the contractor) pays the tax on the material to the vendor.