Sales and Use Tax Issues Within the Construction Industry

March 20, 2024
MarketScale

In this episode of Weaver: Beyond the Numbers, Marc Young, a tax partner at Weaver, is joined by Brandon Hayes, a senior manager in Weaver’s state and local tax group, to review the complex world of sales and use tax issues in the construction industry. They explore this sector’s unique challenges and opportunities, shedding light on the intricacies of tax regulations across different states and focusing on Texas’ distinctive approach to taxing materials in construction projects.

Key Points:

  • Texas allows contractors to act as retailers under separated contracts, enabling tax-free purchases of materials for resale to customers
  • The distinction between lump sum and separated contracts significantly affects how sales and use tax is collected and paid, emphasizing the importance of invoice formatting tax compliance
  • The tax obligation for materials used in construction is determined by the location of the project, not the location of the business or sourced materials

 

This episode provides an overview of the sales and use tax landscape as it pertains to the construction industry, highlighting the critical differences in tax treatment between Texas and other states. It emphasizes the importance of understanding how contract types and the scope of work can significantly influence tax obligations, offering valuable insights for contractors and businesses operating within this sector.

“Organizations need to be proactive rather than reactive,” Hayes said. “From the customer’s perspective, if . . . you’re going to be expanding an existing facility or you’re going to be repurposing an existing facility, and maybe you have some new construction associated with that, really it would be incumbent to have that contract drawn up as a separated contract.” This underscores the episode’s core message: the critical need for strategic planning and understanding of tax regulations to avoid potential pitfalls.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers on Apple Podcasts or Spotify.

©2024

Recent Episodes

View episode

The push toward greener logistics is gaining traction as concerns about environmental sustainability and climate change continue to grow. Traditional diesel-powered vehicles, long the backbone of the freight industry, are increasingly seen as unsustainable. The introduction of zero-emission vehicles like electric and hydrogen trucks is a promising step, but these technologies face significant barriers […]

View episode

In the realm of business, the term ‘innovation’ is often tossed around like a shiny buzzword, suggesting a world of limitless possibilities and creative experimentation. Especially when tackling innovation in B2B, though, whether in the form of new business models, products, services, or partnerships, true innovation requires far more than mere brainstorming and ideation; […]

big banks
View episode

How much damage can big banks do to investors? To hear it from a JPMorgan insider, it’s the hidden stuff that hurts the most. In the latest episode of Untamed Ethos, hosted by Dr. Joshua Wilson, listeners and viewers are privy to an unflinchingly candid discussion with Robert M. Mennella, the author of “Heavily […]