Sales and Use Tax Consulting Services
If you are a contractor that is purchasing materials for incorporation into a construction contract that does not pay sales tax as the end user, you must pay use tax to the State of Ohio based on the county in which the materials are used.
If you do not have a use tax account set up and you are a contractor of any size or relevance, you have a very high probability of being examined by the Ohio Department of Taxation. If you are examined without a use tax account, the State of Ohio can go back seven years, which they will.
Some other issues to consider:
- Look at all fixed asset purchases – if you did not pay sales tax, then you need to pay use tax if you are not a “reseller”
- Sales tax on Freight took effect in August 2005, even on exempt purchases
- Supplies that can be re-used in construction such as gloves, towels, buckets, drill bits, tools, etc , etc are not exempt; you are the end user and if you do not pay sales tax on the purchase, then use tax is owed
- Definition of a “Clean Room” and other contracts that may look like real property construction, can actually qualify as the construction of tangible personal property and provide you with a reseller exemption. The purchases of materials for that job are not subject to sales & use tax. An example is a paint room in a body shop.
For more information on our Cleveland and Akron use tax services, please contact Roger Gingerich at 440-449-6800.
- Looking for more Skoda Minotti Insights on sales tax? Click here for an article from Builders Exchange Magazine authored by our own
Amy Gibson, CPA.