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.

Texas Releases Detailed Guidance on Exempt Organizations

Thursday, October 18th, 2018 -The Texas Comptroller has released a publication that provides detailed information on how sales and use tax a...

Telephone Answering Services Taxable in Arkansas

Tuesday, October 16th, 2018 -The Arkansas Department of Finance and Administration recently ruled that the service of answering calls on be...

Washington Provides Guidance on Lodging Tax for Online...

Friday, October 12th, 2018 -The Washington Department of Revenue released updated guidance that provides tax reporting information for bed...

Economic Nexus in West Virginia

Wednesday, October 10th, 2018 -The West Virginia State Tax Department announced that it will require remote sellers to begin collecting sales...

Idaho Provides Guidance on the Exemption for Medical...

Monday, October 8th, 2018 -The Idaho State Tax Commission recently released guidance that explains Idaho's sales and use tax laws for buy...

Arkansas Does Not Follow Federal Law on Foreign Income

Friday, October 5th, 2018 -The Arkansas Department of Taxation and Finance recently released an opinion that says the state does not conf...