Contractor’s Fee for Overhead Costs Not Taxable in Rhode Island

Tuesday, January 30th, 2018

Construction materials on desk.
Rhode Island

The Rhode Island Division of Taxation recently ruled that markup fees charged on a construction contract were not taxable.

The taxpayer was a construction contractor that charged its customers for labor, materials, and a 15% markup fee. The taxpayer testified that the 15% fee covered overhead costs. The Division argued that the fee was for materials since the taxpayer separately stated materials charges on invoices.

Rhode Island does not tax contracting services, but requires contractors to pay sales tax on materials unless the contractor is acting as a retailer. If the contractor is acting as a retailer, the contractor should charge the customer sales tax on materials. The ruling determined that the taxpayer's fee was for overhead costs, not materials, and was therefore not taxable.'s Fee for Overhead Costs Not Taxable in Rhode Island

About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at or call 866.578.8193.

Washington Penalty Reduction Program

Monday, May 21st, 2018 -Businesses that apply to register with Washington's Marketplace Fairness Penalty Reduction Program by June 30,...

Fuel Used to Heat Detached Garages Taxable in Maine

Monday, May 21st, 2018 -Maine Revenue Services recently released a publication explaining that sales tax applies to fuel that is used ...

Cloud Software No Longer Taxable in Indiana

Thursday, May 17th, 2018 -Effective July 1, 2018, cloud software will no longer be taxable in Indiana. Indiana taxes the sale, lease,...

Sales Tax Increase in the Historic Triangle Region of...

Monday, May 14th, 2018 -Effective July 1, 2018, there will be an additional one percent (1%) regional sales and use tax imposed in the...

Sales by Charitable Organizations Generally Exempt in...

Friday, May 11th, 2018 -The Arkansas Department of Finance and Administration recently addressed the taxability of sales made by a non...

Credit Card Convenience Fees Taxable in New York

Wednesday, May 9th, 2018 -The New York Department of Taxation and Finance recently ruled that convenience fees for credit card purchases...