In a sales tax newsletter, North Dakota discussed contractors’ responsibility for the payment of sales and use tax on tangible personal property (TPP) used in executing a contract. As they are the final users of all personal property consumed or incorporated into real property, contractors are liable for tax on the cost of said personal property. Property provided by others and property used in projects for exempt entities are to be included, unless tax has already been paid on the property. Since contractors aren’t making retail sales when using TPP, sales tax may not be listed as a separate line item on invoices or requests for progress payment. Sales and use tax must be incorporated into the base bid price of a project and not itemized separately. Contractors are exempt from paying tax on medical equipment purchased by a hospital or long-term care facility as TPP and subsequently installed, property installed into a qualifying project on an Indian reservation, and property installed into a qualifying agricultural commodity processing facility or power plant. If a contractor takes possession of materials in North Dakota that are to be used out of state, North Dakota tax is due on the materials unless they are exempt in the state where they are used. Local tax may also apply to materials removed from the state. Contractors that transfer machinery or equipment, except licensed motor vehicles, into North Dakota for use are liable for use tax on the fair market value of the items at the time they enter the state. Additionally, if materials are purchased out of state and then transferred into North Dakota, use tax is due. Credit is provided for tax legally paid to another state. (Sales Tax Newsletter, North Dakota Office of State Tax Commissioner, March 2011)