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Sales Tax Group Services:
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| Services By Industry: |
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Serving Construction Contractors
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California
Construction contractors are usually consumers of materials and pay sales tax on the purchase of materials they use in construction contracts. In fact, when billing lump sum on invoices, in some cases a sales tax permit will not be required. |
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One of the biggest problems contractors face is when using materials to manufacture fixtures, machinery and equipment. This scenario turns the contractor into a retailer and they must now charge tax on the retail selling price of the fixture.
Subcontractors also need to be aware that they are not allowed to take resale cards from prime contractors for furnished and installed materials or fixtures.
The general rule states that construction contractors are consumers of materials and fixtures they furnish and install under lump sum and time and material contracts. They are retailers of machinery and equipment, the price at which similar quantities ready for installation are sold at retail delivered in the market area where the installation takes place.
Manufacturing credits are available to contractors who manufacture tangible personal property. This credit is calculated on the equipment purchased and used by the contractor to manufacture fixtures, machinery and equipment.
Multistate
Many states follow California laws regarding construction contractors, but there are exceptions. One example is Arizona where the prime contractor pays tax on 60% of the contract price. In this case, tax would not be due on the cost of materials.
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Sales Tax Group Office Location:
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Carlsbad Office
5790 Fleet Street #120
Carlsbad, CA 92008
Phone (760) 931-9900
Fax (760) 931-9913
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| Sales and Use Tax Articles: |
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