Contractors Responsible for Tax on Building Materials

Tuesday, May 2nd, 2017

 
 
Image of wall in the processes of being tiled.
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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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