202, 2023

Construction Contractors as End Users

By |February 2nd, 2023|Categories: Construction Contractors|

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 [...]

1701, 2023

Change in Excise Tax Obligation for Sales of Cannabis

By |January 17th, 2023|Categories: Medical Marijuana|

Beginning January 1, 2023, cannabis retailers will be responsible for collecting and paying the cannabis excise tax to the California Department of Tax and Fee Administration (CDTFA).   The new application of tax is a departure from the previous application of tax in which the distributor was responsible for remitting both the cultivator and the distributor excise taxes.  Under the new law, a 15% cannabis excise tax will be applied to the gross receipts of the retail sale of cannabis and retailers will now be required to obtain a cannabis retailer’s license which will create a requirement for them to report [...]

203, 2022

Once Again, California’s Sales Tax Administrators Try to Avoid Transparency

By |March 2nd, 2022|Categories: Compliance|

Most organizations, whether private or public, would prefer to avoid transparency.  At best, allowing the public to review internal policies, procedures, and self-justification is tedious and time-consuming.  At worst (from the organization’s viewpoint), transparency can shine a light on incompetence, faulty reasoning, unjustifiable processes, and, occasionally, outright corruption. The agencies administering California’s sales and use tax program have shown a particular distaste for transparency.  For decades the original agency, the California State Board of Equalization (BOE), refused to disclose the cases and documents underlying its regulatory interpretations, until it finally was forced to do so by a state appellate court.  [...]

702, 2021

Building for Uncle Sam

By |February 7th, 2021|Categories: Construction Contractors|

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 applies to [...]

702, 2021

Tricks of the Trade

By |February 7th, 2021|Categories: Construction Contractors|

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 of the contract [...]