how would the irs audit these companies that are participating in such activities?
How are companies offering free installations without being audited?
I haven't done any window jobs since the rebate has taken effect, but I always sell windows installed, I measure up the house, talk to them about what kind of windows they want and give them one price for everything, I don't break it down by cost of windows, and then installation, it is a lump sum bid.
If I buy a window for $200 that is not the price my client gets it for, so why would I break it out?
IF you ever do work for insurance/mortgauge companies you will be required to break it down-not like you will have to break it down for the government tax credit however, just a per opening price and all that's included in that per opening price.
IF you have customers wanting windows to participate in this rebate, you will be required to break it down because they are NOT crediting permits/lumber/materials/labors/landfill fees to get the window installed..they are ONLY crediting the actual windows themselves.
The IRS will eventually catch up with those boosting the price of materials and offering free installs. Typically, the IRS will look at what the market-rate is for a product. So when the market rate for a window is $200 and someone is selling it for $400 they will get wise to that problem and will likely go after the homeowner and the contractor. When in doubt check with your CPA.
I always mark up windows or any other product I sell and I never broke out installation before, if the IRS needs a break down, I will list it at $45 per opening, since a helper and I can do 2-3 openings and hour, that will look like a reasonable number, but there will still be mark up in the windows.
Do the rules say there can be no mark up on the windows?
Since this is the same energy tax credit that is being used to get a 30% rebate on A/C systems, am I expected to give an equipment price and an installation price?
There is no "penalty" saying you cannot mark up and resell the windows...that is standard business. The IRS does'nt care how badly you rake somebody over the coals with per window either...since the HO's were the ones smart/dumb enough to fall for the price. That'd be no different than thinking they'd crack down on the car dealers during the cash for clunkers rush...do you think stealerships sold cars at cost? heck no....and neither will we, the customer jsut gets a credit that 90% will never be able to use on what the product itself cost them.