West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-26 - Municipal Business And Occupational Tax › Section 110-26-2e - Contracting

Current through Register Vol. XLI, No. 28, July 12, 2024
2e.1. The business
				of contracting is taxable under the municipal business and occupation tax law
				and the gross income derived therefrom must be reported under the contracting
				classification. See Section 1a of these rules as to definition of
				"Contracting," "Prime Contractor," "Subcontractor," "Buildings or Structures,"
				"Contracting, Repairing, Decorating or Improving" and "Speculative
				Builder".
2e.2. Prime and
				subcontractors, taxable on gross income with no deductions therefrom. -- A
				prime contractor, one who furnishes work or both materials and work under a
				written or oral contract, for the construction, alteration, repair, decoration
				or improvement of a new or existing building or structure or any part thereof,
				or for the alteration, improvement or development of realty, must report his
				gross income under the contracting classification without any deduction on
				account of any expenses incurred. If the prime contract executes a contract
				with another for a portion of the job or project, the prime contractor receives
				no deduction from gross income on account of any payments made to the
				subcontractor. The subcontractor will also be taxable on his gross income under
				the contracting classification.
2e.3. Contract entered into with governments.
				-- Gross income received by a person for contracting activities performed for
				the State of West Virginia, the federal government or any of their
				instrumentalities, agencies, boards, commissions or political subdivisions,
				etc., or performed for nonprofit organizations is taxable and shall be reported
				under the contracting classification. The fact that the owner is a governmental
				unit or a nonprofit organization does not relieve the contractor,
				subcontractor, suppliers or any other person from liability for municipal
				business and occupation tax on the full amount of gross income.
2e.4. Form of contract.
2e.4.1. Persons engaged in the contracting
				business shall report the entire gross income under the contracting
				classification, regardless of whether the contract is a turnkey contract, lump
				sum contract, per unit contract, cost plus fixed fee contract, or other
				contract having a similar basis. Gross income received from a contracting
				activity must be reported under the contracting classification and the manner
				of performance, basis of determining cost, fee or income or form of contract
				shall not alter the definition of contractor or of contracting and shall not
				change the taxability of such income from the contracting classification to
				another classification. A contracting activity remains a contracting activity
				regardless of what the parties may name it and regardless of the manner in
				which the parties may make payment and perform the work.
2e.4.2. The measure of the tax under the
				contracting classification is gross income and includes all items of cost where
				the contractor has incurred liability. The cost of materials and labor can only
				be exempted from the measure of the tax in those cases where the contractor is
				not liable to vendors or workmen for payment. In those cases where the
				contractor contends that he has not incurred a municipal business and
				occupation tax liability because he acted solely as agent for the owner, the
				burden of proving alleged principal-agency relationship shall be upon the
				contractor.