Georgia Sales and Use Tax
Informational Bulletin # 2007-2-13
Heating, Ventilating, and Air Conditioning (HVAC) Contractors
February 13, 2007
This informational bulletin explains the sales and use tax treatment of persons who sell,
install, and service heating, ventilating, and air conditioning (hereinafter referred to as
Contractor defined; registration requirement.
Every person who contracts to furnish tangible personal property and perform services
constructing, altering, remodeling, or improving real property in Georgia is required to
file an application for a certificate of registration as a contractor (Forms CRF 002, 004,
and 005). Ga. Comp. R. & Regs. § 560-12-1-.09(2).
Persons who sell and install HVAC equipment into real property construction are deemed
to be contractors.
A person who contracts to furnish HVAC equipment and install it into real property
construction is a contractor and is liable for payment of tax based upon the fair market
value of all tangible personal property purchased, used, or consumed in performance of
the contract. Contractors are deemed to be the users or consumers of the materials they
buy for use in completing contracts. They must pay the sales tax on these materials at the
time of purchase. If sales tax is not paid at the time of purchase, or if the purchase is
made from an out-of-state seller who is not required to collect Georgia sales tax, then the
contractors are liable for the payment of use tax. O.C.G.A. § 48-8-63; Ga. Comp. R. &
Regs. § 560-12-2-.26.
Contractors who also make retail sales of HVAC equipment without installing it into real
property construction are “dealers” and must obtain a separate “dealer” sales tax
When making retail sales, dealers must collect the tax from their purchasers if the
property is sold for distribution, storage, use, or consumption in this state. Ga. Code
Ann. § 48-8-2(3); Ga. Comp. R. & Regs. § 560-12-1-.11. Persons who sell HVAC
equipment without installing it into real property construction are dealers. Any person
making retail sales of HVAC equipment shall collect and remit the tax on the sales price
of such tangible personal property.
Contractors who are also registered as “dealers” may purchase repair parts, used in the
performance of repair or service work, pursuant to a resale exemption and collect sales
tax from the customer.
Repairpersons, servicepersons, and installers are not required to collect tax on their
charges for services. O.C.G.A § 48-8-3(23). Dealers who are engaged in the business of
repairing or servicing tangible personal property for others may purchase repair parts for
resale under certificates of exemption. Ga. Comp. R. & Regs. § 560-12-2-.78(3). When
dealers provide repair parts during the performance of repair or service work, they must
collect sales tax on the sales price of the parts. If the parts and labor are not separately
stated on the invoice, then the entire amount will be subject to tax. Ga. Comp. R. &
Regs. § 560-12-2-.78(1)(a). Note: Contractors who are not required by the
Commissioner to register as dealers must pay sales tax to their vendors on all tangible
personal property that they purchase for use in repair or service work. If such purchases
are made from non-registered vendors, then contractors must report and remit the
applicable use tax directly to the Commissioner. Ga. Comp. R. & Regs. § 560-12-2-
Rate differential can create an additional use tax liability when contractors purchase
materials in one jurisdiction and use them in another jurisdiction that has a higher rate of
It is important to note that contractors may incur additional use tax liability for purchased
materials, even if they paid sales tax on the materials at the time of purchase. For
example, additional use tax liability will attach if the contractor buys materials in another
state and subsequently uses them in Georgia. O.C.G.A § 48-8-30. The contractor is
entitled to claim the tax paid to the other state as a credit against any additional state tax
due to Georgia. O.C.G.A § 48-8-42.
Additional use tax liability can also occur when a contractor purchases and stores
materials in a county with a low sales and use tax rate (i.e., Cobb at 6 percent) and
subsequently transfers and uses the materials on a project in a county with a higher sales
and use tax rate (i.e., Fulton at 7 percent). In this case, the contractor would owe
additional use tax to Fulton County, even though he paid sales tax in Cobb County at the
time of purchase. O.C.G.A § 48-8-30. The contractor can claim the sales tax paid in
Cobb County as a credit to offset the use tax due in Fulton County. O.C.G.A § 48-8-90.
Therefore, in this example, the contractor would owe an additional 1 percent use tax to
FOR MORE INFORMATION
For more information on this subject, contact the Taxpayer Services Division at 404-417-4300,
from 8:00 am to 4:30 pm EST, Monday through Friday, excluding holidays.
Persons with hearing or speech impairments may call our TDD number at 404-417-4302.
For forms and other information, visit our website (www.dor.ga.gov).