Most states regard construction contractors as consumers (end users) of the materials and fixtures they install.  In today’s blog, we’ll examine the implications of this concept and list the states that apply it with few or no exceptions.

Under virtually all state sales and use tax laws, property that contractors affix to real estate is considered to fall within one of the following three broad classifications:

• Materials are generally items that lose their individual identity when incorporated into real estate. Examples include nuts, bolts, nails, screws, lumber, roofing shingles, wires, pipe, asphalt, and concrete.  (Some states that treat materials and fixtures […]
  

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 […]

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 […]