Sales Tax for Construction and Real Property Transactions: Tax Treatment of Contracts, Labor, and Building Materials

Sales and use taxation of construction and real property transactions is difficult to grasp and requires strict compliance with state tax registration and reporting requirements. Tax professionals and advisers must identify critical issues and carefully monitor the transactions and operations of residential and commercial property contractors, buyers, and sellers.

Whether you're a tax professional who works for a construction company or a business that enters into contracts with construction contractors, the tax treatment of these transactions can be subject to varying state-by-state tax rules. These sales and use tax rules can create issues for new construction, the renovation of an existing property, or the ongoing operation of a property.

Tax professionals, contractors, and related parties must recognize the expenditures involved with a project to minimize unintended sales tax assessments, penalties, and interest. Also, understanding how contract pricing dictates state sales tax rules and strategies in challenging audit assessments is crucial.

Listen as our panel examines the common sales tax issues for construction and real property transactions, labor, and materials. The panel will also provide insight into how contract pricing can dictate the application of sales taxes and offer best practices for maintaining state sales tax compliance.

1. Tax treatment of construction and property transactions
   1. New construction and capital improvements
   2. Taxable vs. non-taxable works
   3. Available exemptions
2. Tax registration and reporting
3. Avoiding and managing an audit
4. Best practices for tax professionals, contractors, and investors

The panel will discuss these and other key issues:

• The tax treatment of construction and real property transactions
• Taxable versus non-taxable works and treatment of labor, materials, and other expenditures
• Available sales and use tax exemptions
• Maintaining compliance with state tax registration and reporting
• Navigating the nuances of an audit and challenging assessments

Learning Objectives

After completing this course, you will be able to:

• Determine the tax treatment of construction and real property transactions
• Ascertain the taxable vs. non-taxable works and treatment of labor, materials, and other expenditures
• Recognize available sales and use tax exemptions
• Maintain compliance with state tax registration and reporting
• Navigate the nuances of an audit and post-audit proceedings
• Establish whether nexus exists for purposes of state taxation

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years plus business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of practical guidance to avoid the most common and costly risk areas in sales and use tax compliance.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.