California is advising construction contractors that they may be able to purchase and/or sell materials and fixtures at a partial sales and use tax rate (3.3125%, plus applicable district taxes) for certain jobs when contracted by qualified companies engaged in manufacturing or Research and Development (R&D). California legislation made effective July 1, 2014, allows certain companies engaged in manufacturing or R&D to make annual purchases up to $200 million of qualifying property to receive a partial sales and use tax exemption. The partial exemption also applies to qualifying property purchased for use in constructing or reconstructing a special purpose building. The California Board of Equalization advises that the law is unusual because qualified companies can authorize the construction contractor to make purchases of materials and fixtures for the special purpose building at a reduced tax rate and pass the tax savings back to the qualified manufacturing or R&D company. Contractors are required to obtain a partial exemption certificate from qualified persons. For more detailed information on what contractors need to do to take advantage of the partial exemption, visit https://www.boe.ca.gov/pdf/l430.pdf. (Special Notice L-430, California State Board of Equalization, January 2016)