In Ontario this used to be true - if you had them install you saved the provincial sales tax (8%) because you were purchasing a service that was not subject to PST (the cupboards were treated like a material cost associated with the installation thus not subject to PST either - contractor services were exempt as an insentive to small business). Recently the PST and GST (federal sales tax) were harmonized so this is no longer true. Don't get me wrong, the company installing was paying PST on the cupboards or materials to make them and including that in the price but the homeowner\final purchaser wasn't paying PST to the government again when purchasing them. If you bought the cupboards without the installation they were subject to PST however. Now you pay PST on it all, the cupboards and the installation - joy.

Interesting. When we were looking toward custom cabinetry the shops told us that if they installed the cabinetry there would be NO tax- none - zippo- zero. Now, if they didn't install them we would have to pay the full tax amount which is 9.75 in my county in TN.

I'm in Ohio and it's complicated and infuriating....so I'm not surprised that other companies can be confused about the taxes. You said you'd think the other businesses would know...but the states make it too complicated....and most bookkeeping software is a nightmare to set up to collect on the taxes for 'installed purchases'...read on.

TN might be like what we have:

If it's installed there's still a tax paid, but the dealer pays the tax on the 'cost' of the cabinets.

For instance, you buy a $1500 item. If you don't get it installed (in Ohio), you pay 6.5% for tax and the item would cost you $1597.50

If you get it installed, you'd be billed for the cabinets without tax "to you", but with imbedded tax (at dealer cost). Let's say 'cost' is $1000....then your total would be: $1565.00....a difference of $32.50. For $20K of cabinets, you'd save $650.

The manufacturer's that sell to these companies don't want to be responsible for collecting taxes...so it's put on the dealers.

The custom cabinet shops probably pay tax on the raw materials...which is why they say no tax if installed. But if they don't install....then it's kind of being double taxed. I don't know if this is the case....I'm just speculating.

I think it has to do with goods and services. If you just buy cabinets they are considered goods (these are taxed) if you buy the installation it is services (not taxed) and the cabinets are along for the ride.

I was swayed by this in Maryland (not paying the tax) and learned my lesson. The kitchen designer's installer was horrible and did a terrible installation job. Unfortunately by the time the cabinets were installed the KD was on maternity leave. My contractor would not touch the cabinets after they were installed. This go around I let my contractor approve my cabinet purchase and install the cabinets and they were done beautifully even though my floors were very uneven.

Thanks for the replies.

OK. So it looks like this one dealer is charging sales tax on the wholesale cost of the cabinets to them and not the retail price. If that is the case, it would explain why she couldn't or wouldn't tell us the exact percentage. It would give away their markup.

I'll bet nkkp's dealer was just eating the tax he was supposed to have paid on the raw materials. It is starting to make sense. I think I may call the state tax folks in Nashville and see what they say.

Anyone else from Tennessee with any comments?

We are in the process of purchasing cabinets in Tn. We just met with one company in Nashville that said they charged tax no matter who installed them! Everyone else we've talked with said if they installed them there would be NO tax otherwise we would pay tax. Lowes said no tax if they installed.

Heck, just bring them revenuers a case of home-made moonshine and you'll be fine :-)

Ditto in Maryland...if you have them installed by the same people you bought them from (KD place, HD, Lowes, etc.), no state sales tax.

Oh wow! This is getting stranger and stranger. We have a large kitchen in our new house, so quite a bit of money is involved when we look at the difference between 0% and 9.5% sales tax.

For our kitchen is was pretty much a wash. The installation fee was about the same as the tax is going to be. Except for the one company that said we had to pay tax plus installation.

I'm in TN, & tax is 9.25%...but I also have zero tax on my custom cabinets (which I can ALMOST afford!).

One more perk of custom cabs.

On a somewhat OT note, Best Buy told me that if I bought something that cost over $3000, they'd give me GA sales tax. I live pretty close to GA, but there is no Best Buy in GA for 200+ miles.

Just a follow-up. I went to Lowe's this weekend and if they install we won't be charged sales tax.

Thanks to everyone who commented. Here is the latest.

I read the state sales tax rules and the actual laws they are based on. (I think my head will stop spinning in a week or two.) Then I called the tax folks in Nashville and asked what was up.

It boils down to this. Real property is not subject to sales tax, but personal property is. Ignoring Tennessee's 10,001 politically motivated personal property tax exemptions, contractor's who build or repair real property are not required to collect retail sales tax on their labor or the finished work, but they are required to pay sales tax on the materials they use.

This means that a business supplying cabinets to a builder for a builder to install has to charge the builder sales tax for the cabinets, since the cabinets are material to the builder.

However, if the cabinet business installs the cabinets, the installation comes under the real property definition, and there is no retail sales tax due. But the cabinet business must pay tax on what they paid for the cabinets, if they bought them, or the materials, if they built them.

So, it looks like the cabinet business that said we would "only" have to pay 3.5% if they installed them was planning to charge us for the tax they are supposed to pay on the wholesale price of the cabinets.

At least this has helped validate the close to 200% mark up on cabinets that others been posted about on GW before.

We are now talking to a custom cabinet maker.