The Tax Trotter

Of Countertops and Sales Tax in Massachusetts

Posted by Irina Pisareva on Jan 25, 2021 3:15:00 PM
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Remodeling one’s kitchen is undoubtedly one of the most expensive items on a fixer-upper owner’s budget. The Tax Trotter knows first-hand – she and Mr. Tax Trotter purchased the worst house on the best block 8 years ago and are still renovating it. Multiple cost-saving strategies have been deployed, including buying underpriced mahogany furniture sold on commission to affixing a custom-ordered granite countertop to a set of classic style cream cabinets sourced from IKEA on a savvy friend’s advice. There were some excesses because the Tax Trotter insisted on using a certain European paint brand – to the Tax Trotter’s eye the brand’s color palette did not appear as "fluorescent" as paints manufactured by brands offered in big box stores.

These fond memories of adventures in kitchen remodeling were brought back by a recent discussion at a Sullivan’s state tax practice meeting. It has been brought to the Tax Trotter’s attention that there appears to be a widespread confusion within the community of Massachusetts-based countertop companies regarding whether, for sales/use tax purposes, they are to be treated as vendors of tangible property or as contractors. In instances brought to the Tax Trotter’s attention by her colleagues, the DOR auditors have not sought to correct and educate the countertop companies and the contractor/vendor problem had to be resolved as part of the appeal process.

We have learnt that several countertop companies had been reporting contracting job sales as if they were vendor sales of tangible personal property, and charging sales tax on customer invoices. Some of these companies had relied in part on the practices of other, similar Massachusetts countertop companies. The Tax Trotter notes that most of these companies are small businesses without tax departments.

For sales tax purposes, contractors who construct or improve real property are distinguished from vendors that sell tangible personal property. Only the latter are subject to sales tax. A seller of tangible property, which may be sold over the counter or requires nothing further than simple "installation, assembling, applying or connecting services," will be regarded as a vendor of tangible property and not as a construction contractor.[ii] Examples of installed standard equipment or fixtures, on which the seller/installer would be required to collect and remit tax from its customers (unless otherwise exempt), include awnings, blinds, electrical fixtures or wireless alarm systems.[iii] Once installed and attached to real estate, such items could be removed with little or no damage to the fixture or the real property, and possibly reused at another location. By contrast, it is rarely possible to remove a custom countertop without damage and re-use it "as is." Thus, a countertop job is a not a taxable vendor sale because the countertop itself does become part of the real estate.

Having spent months scouring for cost-efficient options to acquire both kitchen cabinets and a countertop, the Tax Trotter assures you that one is much more likely to come across a standard set of cabinets (IKEA!) than a standard countertop. The countertop shops the Tax Trotter visited displayed slabs of available stone and samples composite countertop materials. The Tax Trotter was able to review samples of complete kitchen countertop projects, none of which could be replicated or adjusted to the Tax Trotter’s space. After the countertop maker’s team spent a couple of hours contemplating the countertop based on the Tax Trotter’s kitchen plans and layout, the Tax Trotter also spent two hours with the sales rep using a virtual reality tool to custom-design the countertop to the Tax Trotter’s exact specifications. Once the Tax Trotter signed off on the design, her countertop was custom-made out of two slabs of granite, delivered to her house and then permanently affixed on top of the cabinet base on the day of delivery.

DOR officials had indicated to my SALT colleague that they are actively working on issuing sales & use tax guidance directed at specific industries. Extremely useful guides for electricians and plumbers are already available on the DOR’s website. See Sales Tax Guide for Electricians | and Sales Tax Guide for Plumbers |

Until such guidance is available for countertop manufacturers, it is the Tax Trotter’s sincere hope that the DOR Audit Division will seek to educate the taxpayers, especially on matters concerning small businesses, and proactively correct any erroneous industry practices as part of the audit process. If the facts are clear enough and timely presented, both the DOR and taxpayers will benefit from not having to deal with the time and expense associated with the formal appeal process.

The Tax Trotter is curious if readers from other states have experienced similar run ins with contractor v. vendor treatment for sales & use tax purposes. If you have, please post a comment or email the Tax Trotter at

The Tax Trotter thanks her state tax colleagues Mssrs. Richard Jones (, Joseph Donovan ( and David Nagle ( for their invaluable insights and contributions to this article. Mr. Donovan penned Letter Ruling 79-46 during his tenure at the Department of Revenue and Mr. Nagle worked on the Classic Kitchens, Inc. case with the late, great Mr. William Halmkin, also of Sullivan. Mr. Jones assisted countertop companies with recent audit appeals.

It is the Tax Trotter’s humble opinion that Mssrs. Jones, Donovan and Nagle are the dream team for all of your state tax advisory and controversy needs.

[i] As explained to the Tax Trotter by her colleagues, under Massachusetts law, real estate contracting jobs are not contracts for the sale of goods such as bricks, window frames or custom-built cabinetry or countertops. See White v. Peabody Construction Co., Inc., 386 Mass. 121, 132-133 (1982); DOR Directive 14-2. Thus, contractors are not retailers of the materials they use in connection with their construction projects and therefore cannot be liable for sales tax on their sales to customers. Classic Kitchens, Inc. v. Commissioner of Revenue, ATB Dkt. No. C262393 (2004), quoting White v. Peabody Construction Co., Inc., 386 Mass. 121, 132-133 (1982); Ace Heating Service, Inc. v. State Tax Commission, 371 Mass. 254, 256 (1976). Instead, Massachusetts treats contractors as consumers of the building materials they use in constructing or improving real estate. The contractor is treated as a consumer even if it makes a separate charge for materials in its contract or on a customer invoice. Letter Ruling 79-46.

[ii] See Classic Kitchens, Inc. v. Commissioner of Revenue, ATB Dkt. No. C262393 (2004), quoting Emergency Regulation No. 12 at (4)

[iii] See e.g., Letter Ruling 85-25.

Topics: Sales & Use Taxes, Tax Trotter: State Tax Files, State Taxation of Real Estate Contractors

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The Tax Trotter brings you tax insights from around the world.

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

Meet the Editor

Irina Pisareva

Irina Pisareva is Tax Partner in Sullivan's New York office. She specializes in tax structuring of cross-border debt and equity transactions, alternative investment funds and investment management companies, international taxation of securities and private capital.

Before joining Sullivan, Irina was a partner at EY where she served as a lead international tax service partner for private equity, credit and multi-strategy asset management firms with $2bln to $300+ bill AUM. In addition to her structuring and transactional practice, Irina developed programs to reduce organizational tax risk and optimize global effective tax rate for companies and family offices.

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