Construction Contractors Services

Sales and use tax issues can be particularly vexing for contractors, especially if your company operates in more than one state.

construction-iconIn most states, sales tax laws and regulations affecting the construction industry are both complex and counter intuitive. To make matters worse, statutory differences from state to state can create a compliance nightmare, and a sales and use tax audit can result in an assessment well beyond your true liability.

A McClellan Davis consultant can help you navigate the compliance minefield. We can analyze any state sales tax audit and represent and defend your business throughout the administrative protest process. We’ll help you put cost-effective procedures in place to minimize your company’s sales and use tax exposure and possibly even reduce your tax burden. If you’ve significantly overpaid the tax, we’ll prepare and pursue a refund claim on your company’s behalf.

Our principals have in-depth experience in dealing with sales and use tax issues pertaining to construction. One of our principals is the author of the Multistate Guide to Sales and Use Taxation: Construction, currently in its fifth edition. For an article on multistate sales and use tax construction issues excerpted from two of our principal’s books, click here.


Industry: Lump Sum Construction Contractor
Procedural Summary: Appeals, Claim for Refund

Sales Tax on ConstructionReduction/Refund: $950,000
(100% Reduction + Refund)

This case came to us with a total liability of approximately $700,000 but ended with our client being granted a refund totaling approximately $250,000. The case included two separate audits and a separate claim for refund. Our firm became involved after the audits had been completed, and unsuccessfully contested by two prior representatives. The first audit period had an asserted liability of $390,000. We were able to reduce the liability to zero and establish a net refund of approximately $100,000 for that period. The second audit period had an asserted liability of $295,000. We were able to reduce that liability down to $40,000. Finally, we filed a claim for refund for the periods following the second audit, establishing that our client was due an additional $150,000. This case serves as a good example of the complexity and confusion that exists in construction contract law. The correct result eluded numerous experienced professionals for several years before our firm became involved.

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