Texas contractor responsible for taxes.

In Texas, it was found under audit that a lump-sum contractor owed sales tax on purchases it made to complete a contract to install a heating and cooling system for an exempt utility. The lump-sum contractor asserted that is relied in good faith on an exemption certificate issued by the exempt utility. Even though it is true that the statutes allow telephone cooperatives to make exempt purchases, the lump-sum contractor is not allowed to use this exemption for its purchases on behalf of the utility. Furthermore, the exemption for lump-sum contractors does not apply to telephone cooperatives. The exemption for lump-sum contractors is only available in relation to government, religious, educational, and public service organizations. (Hearing No. 43,265, January 27, 2004.)

Posted on June 15, 2004