Repairs-Dealing with Contractors

When making repairs, businesses and homeowners should be very careful in their dealings with contractors. Some contractors are ethical and some or not. Either way, it is very important that a homeowner take steps to protect themselves.

• Be very wary of door to door solicitations for repair work.
• Get bids from more than one contractor.
• Ask for references and contact the references.
• For local contractors, check the Better Business Bureau site at bbbhou.org to see a contractor's history.
• Get the scope of work and pricing in writing, and sign a contract.
• Review the contract in detail and watch for “fine print.”
• Structure the payments so you only pay when certain milestones have been completed. A 5 to 10% down payment is appropriate. Do not pay a lot up front and try to agree to have the majority of the payment to come only after all repairs are completed.
• Do not pay in cash if possible. If you absolutely have to pay in cash, get a receipt and get the contractor’s tax I.D. number. Paying with a check or credit card allows you to trace the payments.
• Do not pay taxes when you are not obligated to.
  For instance:

• Residential Real Property. Labor charges for repair or remodeling services performed on residential property are not subject to sales tax.
• Non-Residential Real Property. Labor charges for repair or restoration of non-residential real property located in declared disaster areas, which was damaged by the disaster, are not subject to sales tax.
• Tangible Personal Property. Labor charges for repair or restoration of personal property damaged by a disaster are not subject to sales tax. The exemption includes labor costs to launder or dry clean damaged clothing.
• Materials. The cost of materials associated with tax-exempt repair, remodeling, or restoration services remains subject to sales tax.
• Arborist Services. Arborist services, such as cutting down or cutting up dead or damaged trees in declared disaster areas, are not subject to sales tax.
• Removing and Disposing of Debris. Charges for removing and disposing of debris and other waste, including branches, limbs, or trees, are taxable even in declared disaster areas.
• Exemption Certificate. The purchaser of a non-taxable service should present the seller with a completed exemption certificate. The certificate must give the reason for claiming the exemption; for example, "Repair due to Hurricane Ike in Harris County." Exemption certificates are available through the following link: http://www.window.state.tx.us/taxinfo/taxforms/01-339.pdf.
• Combined Taxable and Non-Taxable Services. Charges for non-taxable services should be separately stated from charges for taxable services and items. A lump sum charge will be presumed taxable if the taxable portion is greater than 5% of the total bill.