USA Sales Tax Exemption on Construction Materials

Apr 29, 2019
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United States
I work for a telecommunications contractor that builds communications towers from the foundations up.

There have been some conversations in-house about whether or not we are liable to pay sales tax on materials if the end customer is exempt. (We have one customer in particular that self assesses their sales tax liability) A few vendors in IA and OK have questioned us when we provide them our customers Uniform Sales & Use Tax Certificate-Multi Jurisdiction. However most are willing to accept the certificate if we provide their respective state exemption form and sign it as a purchasing agent or as exempt using our customers exemption number. The vendors that do not seem to allow it are our concrete vendors that state concrete is not exempt for resale purposes. We are exempt in our home state but not either of these.

Is this common practice? Or is this going to come back and bite us in the end? I've had several calls with each state and they've stated it is and isn't acceptable on different occasions, just really depends who answers the phone that particular day. Of course, nobody is willing to send anything in writing for us to keep on file in case we are audited in the future.

I believe if we were audited, each state would view our purchasing the materials and the sale of the entire structure as 2 different transactions and say we are liable for the tax on the materials. We have been in litigation with our home state for the past 4 years over similar issues as we believe this is a tax pyramid.

How do others out there handle situations like these?


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