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Jesse McClellan, Esq.

About Jesse McClellan, Esq.

Jesse is a licensed attorney and former sales and use tax auditor. He is a principal at McClellan Davis, LLC, a firm that specializes in representing businesses for sales and use tax matters. Email Jesse

Building for Uncle Sam

How Sales & Use Tax Applies to Construction Contracts with the United States Government

Generally speaking, the United States Government is immune from state taxation under the Supremacy Clause of the United States Constitution.  Courts have ruled that states are precluded from taxing activities where the incidence of tax falls directly upon the federal government, its agencies, and instrumentalities.  But what about construction contracts with the federal government where the contractor is the party that is providing and installing items on behalf of the federal government? 

This article uses California as an example to briefly explain how tax […]

Tricks of the Trade

Understanding How Sales and Use Tax Applies to Cabinet Contractors in California Can Save You a Bundle of Tax

Sales and use tax rules for the construction industry are complex.  Generally speaking, California construction contractors are considered consumers of materials and retailers of fixtures.  Consumers must pay sales or use tax on the costs of the items they “use,” and retailers owe tax on the sale price of the items they sell.  Like many areas of taxation, however, the devil is in details.  The application of tax may vary depending on the item being installed, the form […]

McClellan Davis Efforts Lead to Change for California Board Hearing Policies

Close-up Photo Of Gavel And Law Book

On May 24, 2016, Jesse W. McClellan, Managing Partner, testified before the Members of the State Board of Equalization (Board) at the California Taxpayers’ Bill of Rights Hearings in Sacramento, California to address a variety of concerns he had with Board policies. Part of his testimony focused on procedural problems with appeals cases that are scheduled for hearings before the elected Members of the Board. Specifically, Mr. McClellan stressed the need to establish guidelines for appeals cases that are removed from the hearing calendar by Board […]

McClellan Davis Fights for Taxpayer Rights

Fotolia_14893664_S_ConstitutionOn May 24, 2016, Jesse McClellan, Esq., Managing Partner, testified before the Members of the Board of Equalization at the California Taxpayers’ Bill of Rights Hearings regarding two issues that have been historically problematic for taxpayers.  The first issue addressed pertained to the Board’s practice of permitting the Business Tax and Fees Department (Department) and/or the Legal Appeals Division (Appeals) to remove cases from the board hearing calendar without any meaningful reason or timetable.  The second issue pertained to the lack of review for Administrative Protest denials.

 

The first problem:

A hearing before […]

State-by-State Physical Nexus Criteria

SalesMap of USA with flight paths. Image with clipping path. and use tax nexus is a very fluid and evolving area of tax law, and although Congress has historically been considered to be the sole gatekeeper to change, states have recently become emboldened in their efforts to unilaterally lower nexus barriers.  For example, on March 22, 2016, South Dakota passed S.B. 106 which effectively establishes an economic nexus standard.  The law requires remote sellers to register and collect use tax on its sales into South Dakota if its sales into the state exceed $100,000 […]

Fundamentals of Nexus

Fotolia_99128693_S_nexusI commonly work with clients that have nexus questions.  These days those questions often involve some of the more technical aspects of nexus, such as affiliate or click-through nexus.  But, even where I’m addressing some of the more technical aspects of sales and use tax nexus, I always try to make sure our clients understand where it all started, which is the subject of this article.  Having a clear understanding of the genesis of sales and use tax nexus, will better enable you to address fact-specific nexus questions that relate to your […]

Jesse McClellan Obtains another Favorable Decision before the California Board of Equalization

Jesse W. McClellan, Esq., Principal, obtained another favorable decision on behalf of his client at the Board hearings held in Culver City on February 24, 2016.  His second victory at the Board level hearings, which are held monthly, in the last three months.

The case involved an audit of a California based manufacturer of ink and related products used in the textile industry.  The Board’s auditor disallowed numerous claimed exempt sales for resale for a variety of different reasons.  Most of the disallowed transactions were resolved prior to the hearing, but the audit […]

California Board of Equalization seeks to Amend Personal Liability Regulation

Close-up Photo Of Gavel And Law Book

The Board of Equalization is in the process of making changes to Regulation 1702.5, Responsible Person Liability, which is the regulation that addresses the Board’s ability to pursue collection action against individuals for sales and use tax owed by closed businesses. Any meaningful changes to the regulation will have a significant impact on California taxpayers, because the changes will impact the State’s ability to hold individuals personally responsible for unpaid sales and use tax obligations. Over the past several years, personal liability collection efforts by the […]

Construction Contractors as Consumers When Installing Property of Others – at SalesTaxSupport.com

SalesTaxSupport.com

This month, Jesse W. McClellan, Esq, co-founder of McClellan Davis and featured contributor at Sales Tax Support writes about sales tax and construction contractors. Sales Tax Support publishes articles written by experts and thought leaders in the specialized field of sales and use tax with small and medium sized business owners in mind.

Visit our blog to read Jesse’s informative article “Construction Contractors as Consumers When Installing Property of Others?”

Construction Contractors as Consumers When Installing Property of Others

In previous posts, my partner, Dan Davis, CPA, addressed how states tax installation charges and how states tax contracts with exempt entities. This article includes a related question: how states tax property that is being installed when title to that property is not held by the installing contractor and tax was not previously paid. For example, California generally considers a contractor to be the consumer of equipment and machinery which is furnished and installed under a contract with the U.S. Government, but the contractor will not generally be considered the consumer of such property if title is […]