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

reviving education and cities
View episode

This episode of The Guide Post takes center stage in revitalizing education and cities, examining the transformative synergies between urban development and educational innovation. As cities like Detroit undergo monumental changes, the conversation explores the pivotal roles that education systems play in urban renewal. Notably, Detroit’s resurgence, underscored by the return of the NFL…

AI in content marketing
View episode

Will 2024 be known as the year AI made waves in content marketing? It sure seems so, with recent AI-driven ads from Toys R Us and Under Armour generating significant buzz online. Not just this: Despite having no official ties to the brand, a mock Volvo ad created entirely by AI has also gone…

View episode

The challenges of hiring for a startup have become more pronounced these days than ever. With technological advancements and evolving market demands, startups must be agile and strategic in their hiring practices to ensure success. According to some studies, nearly 90 percent of startups fail, with a significant factor being the inability to attract…