Contractors Responsible for Tax on Building Materials

Tuesday, May 2nd, 2017

 
 
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New York
Construction

The New York Tax Appeals Tribunal recently ruled that a contractor was responsible for paying sales or use tax on materials it used in construction.

The taxpayer installed cabinets, countertops, tile, and other building materials in kitchens and bathrooms. It also made retail sales of materials. The taxpayer purchased all materials tax-free for resale. It then sold some materials at retail and used other materials to perform construction contracts. The taxpayer argued that it was a retailer and did not have to pay tax on any of the materials.

New York considers contractors to be the consumers of materials used in construction contracts. As the consumers, contractors must pay sales or use tax on the materials.

The taxpayer was acting as both a contractor and a retailer. It acted as a contractor when it performed construction contracts. As a result, the taxpayer was the consumer of materials used in those contracts and owed use tax on those materials.

https://www.ttrus.com/sites/default/files/ny/826105.dec.pdf


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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.

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