Pennsylvania Code › Title 61 - REVENUE › Part I - Department of Revenue › Subpart B - General Fund Revenues › Article II - Sales and Use Tax › Chapter 31 - IMPOSITION › CONSTRUCTION CONTRACTORS › Section 31.12 - Imposition of tax

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
Construction activities
. Imposition of tax on construction
						activities shall conform with the following:
(1) A contractor shall pay tax upon the
						purchase price, as defined by the TRC, of all property, including materials,
						equipment, components and supplies, which he furnishes and installs in the
						performance of his construction activities.
Example 1
: As part of a contract for
						  the construction of a house "X" Contractor has agreed to install a built-in
						  dishwasher for his customer. "X" Contractor pays his supplier $150 for the
						  purchase of the dishwasher. "X" Contractor pays $9 sales tax to his supplier
						  and subsequently installs the dishwasher in the kitchen of the house he is
						  building. The dishwasher becomes a part of the realty and is included in the
						  overall price of the house to the customer. "X" Contractor does not charge
						  sales tax on this transaction to his customer. The contractor may include the
						  tax he must pay in his bid proposal but not as a separately stated item.
(2) A contractor whose activities
						are confined to construction activities is required to pay tax directly to his
						supplier at the time he purchases the materials, equipment, components or
						supplies which he furnishes and installs. A use tax license number shall be
						available to a construction contractor from the Department to permit him to
						remit tax directly to the Department upon the purchases from vendors who are
						not required or are not licensed with the Department for the collection and
						remission of tax.
Example 1
: "X" Contractor purchases
						  lumber in Baltimore, Maryland, which is delivered in Pennsylvania. The lumber
						  supplier is not registered with this Commonwealth to collect sales tax of this
						  Commonwealth. "X" Contractor shall be required to remit use tax on his
						  "purchase price" (including shipping charges) of the lumber directly to the
						  Department under his use tax number. See §
														33.2 (relating to purchase
						  price).
Example 2
: "X" Contractor purchases
						  and takes possession of lumber in Baltimore, Maryland. At the time of purchase
						  the Maryland rate of tax is 4%. "X" Contractor pays to his supplier 4% tax.
						  Maryland and the Commonwealth have enacted reciprocal tax statutes. Because of
						  this reciprocity, "X" Contractor may take a 4% tax credit against the use tax
						  of the Commonwealth which he owes. "X" Contractor shall be required to remit 2%
						  use tax on his "purchase price" of the lumber directly to the Department under
						  his use tax number.
(3) A
						construction contractor shall pay tax upon all tools and equipment, such as
						backhoes, cranes, saws, drills, motor vehicles, and the like, which are used
						but not transferred in conjunction with his construction activities. Effective
						March 4, 1971, a construction contractor performing contracts for public
						utilities may no longer claim the exemption of the utility upon the purchase or
						rental of such items.
(4) A
						contractor who performs both construction activities and sales activities shall
						be required to be licensed with the Department for the collection and remission
						of sales tax and shall be issued a sales tax license number. As to property
						which he knows he will resell, he may use a resale exemption certificate upon
						his purchase from his supplier. He shall collect and remit tax upon the sales.
						As to all other purchases which he may make, he shall pay tax to his supplier
						at the time of purchase.