Do contractors pay Iowa sales tax?

A contractor is considered to be the consumer of building materials and supplies purchased for use in a construction contract, and is, therefore, responsible for paying sales tax at the time the purchases are made, or use tax if the purchases were made tax free. Suppliers that sell to building contractors must charge sales tax on the purchase price of the items. Suppliers should not usually accept sales tax exemption certificates from contractors. Contractors are not allowed to make purchases for resale merely because they have a sales tax permit number. However, designated exempt entities awarding construction contracts may issue special exemption certificates to contractors and subcontractors, allowing them to purchase, or withdraw from inventory, materials for the contract free from sales tax. Learn more. In some cases, a contractor may sell supplies and materials over the counter. This contractor is referred to as a contractor-retailer and may purchase supplies and materials tax fr ... more