Contractors and Texas Sales and Use Tax

I often talk to contractors who have just received their Sales Tax Audit Notices. The majority of the time they have concerns.

The business owner may be performing residential jobs, new or existing commercial work or both. The types of contracts (lump-sum vs. separated) can also dictate when sales tax is either charged to the customer or paid by the contractor. In the case of exempt clients the contractors need to know about exemption documentation and whether to separate the contract charges (i.e., materials and labor).

Dino Marcaccio, President Former Texas Comptroller State Tax Auditor, 16 Years

Dino Marcaccio, President
Former Texas Comptroller State Tax Auditor, 16 Years

Basically, there are quite a few sales tax variables for Texas contractors to consider when bidding their jobs. Although there are answers to most of these sales tax questions, it is not always easy to find in a single document. In addition, the Contractor Tax Statutes and Tax Rules are written in a somewhat technical language.

Besides the Texas Tax Code, another Texas Sales Tax authority to refer to are the 1000’s of Texas Administrative Hearings and Letter Rulings. Reading through these often long and ‘technical sounding’ documents can leave you feeling even more confused.

For an easy to understand summary for contractors, please see the featured article in Today’s CPA titled ‘Contractors and Texas Sales and Use Tax’.  This article was written by Gilbert Zamora, CPA (Texas Tax Group’s Director of Tax Policy) and Allen Leibnick, CPA, CFF (President of Overpaid Payables Recovery, Inc). We hope you find the article helpful.

Note: Gilbert Zamora, CPA and Allen Liebnick, CPA presented this article and gave a presentation at the 2015 Texas Society of CPAs – Texas Tax Conference in Houston.

-Dino Marcaccio, President of Texas Tax Group

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