How are contractors taxed on materials, labor and supplies?
A contractor may be deemed to be a retailer or may be deemed to be a consumer. The tax treatment of the work performed by contractors depends upon whether the contractor is acting as a retailer or acting as a consumer. A contractor is a consumer when constructing, installing, repairing, or servicing real property such as buildings. As a consumer, the contractor must pay sales or use tax on materials and supplies used in such activities. A contractor may not charge sales tax on materials or supplies used in such work. However, a contractor’s selling price may reflect all costs incurred. A contractor is a retailer when selling, installing, repairing or servicing tangible personal property or performing landscaping services.
A contractor may be deemed to be a retailer or may be deemed to be a consumer. The tax treatment of the work performed by contractors depends upon if the contractor is acting as a retailer or acting as a consumer. A contractor is a consumer when constructing, installing, repairing, or servicing real property such as buildings. As a consumer, the contractor must pay sales or use tax on materials and supplies used in such activities. A contractor may not charge sales tax on materials or supplies used in such work. However, a contractor’s selling price may reflect all costs incurred. A contractor is a retailer when selling, installing, repairing or servicing tangible personal property or performing landscaping services. When selling, installing, repairing, or servicing tangible personal property, or performing landscaping services, a contractor is liable for sales tax on all gross receipts from labor, material, and other charges for such sales or activities (unless an exemption applies to
