What to Do If You Are a Contractor

Contractors are often the subject of sales and use tax audits. Those sales and use tax audits can lead to substantial assessments for a variety of reasons.

Sales are the most common area of concern. While determining the taxability of a job can be difficult, determining what exemption document to obtain from the customer can be even more difficult. Knowing whether or not an exemption document is properly filled out is not the simplest task either. After all, contractors are in the business of building and repairing, not learning about different sales tax forms and collecting documentation.

There are very specific rules as to what qualifies as a Capital Improvement as well as what qualifies as a sale to a sales tax exempt organization or government agency. Sales Tax Defense LLC can help you work through all the challenges a contractor faces when trying to substantiate the taxability of your sales.

While sales are the most obvious area of concern, failure to pay sales tax or self-assess use tax on certain purchases can also lead to a sales and use tax assessment. Vendors often fail to charge sales tax on their sales to contractors for a variety of reasons. The vendor could believe you are using the materials in a nontaxable fashion, believe that you do not have nexus with New York State so they don’t have to collect sales tax, or just neglect to collect sales tax to keep their prices down.

Do not go through all the trouble to make sure your sales are being taxed correctly only to owe a substantial amount of use tax on purchases because a vendor failed to charge you sales tax.

Similarly, you do not want to overpay sales tax either. Depending on the taxability of the work being completed, no all of a contractor’s purchases are subject to sales tax (or self-assessed use tax). Sales Tax Defense LLC can help you make sure your money stays in your pocket when it belongs there.