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20 Nov

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Industry Specific State and Local Tax Insights

November 20, 2015 | By | No Comments

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Understanding tax implications for your business can be tricky, especially when your company operates in multiple states. Fortunately, at Delap we have an in-house State and Local Tax (SALT) specialty team who offer direction and insight for affected businesses. In an effort to provide maximum value to these companies with multi-state activities, our SALT team recently hosted a niche specific seminar for the real estate, home builder, and construction industries. Keep reading for a high-level recap of our recent seminar.

For companies in the real estate, home builder, and construction industry niches, the tax rules not only change frequently, but from location to location.

Don’t get caught in the dark!

You should know the rules if your company is:

  1. Conducting business in multiple states;
  2. Carrying on business in more than one location in those states;
  3. Acting as the prime or sub-contractor on a construction project;
  4. Obtaining business and professional licenses;
  5. Collecting sales tax on appropriate sales and remitting timely;
  6. Filing property tax returns;
  7. Remitting unclaimed property appropriately to the states; and/or
  8. Writing contract language and invoices to reflect what services are really being performed.

Does your contract language reflect what’s really happening?

Contract language can influence the taxability of each construction project. It is important to clearly identify the following items within the contract:

  • The type of contract (time and materials, cost plus, etc.);
  • Who will be purchasing the materials (when and where);
  • What services will be performed;
  • How subcontractors are used; and
  • Who receives the incentives or exemptions.

Additionally, segregating a project into separate contracts for labor and materials may allow for favorable tax treatment.

Contract language, when not clearly defined and understood, can drastically change the profitability of a project. Proper identification of the above information in your contract language can also protect you against unexpected taxes.

Still curious to learn more? Reach out to our SALT team today to start a conversation.

Check out our events page on our website to RSVP for upcoming seminars and trainings.

 

Harriet Strothers, CPA
Partner
hstrothers@delapcpa.com

 

Katie Kaiser, CPA
Senior Manager
kkaiser@delapcpa.com