A Daytona Beach contractor buys lumber for a school project for incorporation into real property. The owner is tax-exempt, but the contractor is the purchaser. What should the tax file generally show?
Correct Answer
D) contractor pays sales tax
Florida Department of Revenue guidance states that a contractor's purchase of construction materials is generally subject to sales tax even for work for tax-exempt entities, unless a qualifying direct-purchase structure applies.
Why This Is the Correct Answer
Florida Department of Revenue guidance states that a contractor's purchase of construction materials is generally subject to sales tax even for work for tax-exempt entities, unless a qualifying direct-purchase structure applies.
Why the Other Options Are Wrong
Option A: owner pays payroll tax
owner pays payroll tax puts the item in the wrong financial bucket, timing, base, or comparison for sales tax on materials.
Option B: supplier files notice to owner
supplier files notice to owner puts the item in the wrong financial bucket, timing, base, or comparison for sales tax on materials.
Option C: surety pays use tax
surety pays use tax puts the item in the wrong financial bucket, timing, base, or comparison for sales tax on materials.
Memory Technique
An unlabeled Clerk Reviews dollar tells the wrong story.
Reference Hint
Open-book path: tab Florida Statutes Chapter 212; Florida Department of Revenue Sales and Use Tax on Building Contractors to Florida Department of Revenue GT-800007, Construction for Tax-Exempt Entities; confirm the Florida statutory or Department of Revenue rule before answering.
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