Tag Archives: construction contractors in Ohio

Multistate Tax Alert: Construction contractors operating in Ohio can be caught in the middle for sales and use tax

Ohio sales and use tax compliance can often be complicated, which is very evident for contractors operating in Ohio. A contractor operating in Ohio can be a consumer or a vendor, depending on what is being installed and how it is being used by its customer. If the proper determination is not made, the contractor may pay the incorrect tax causing overpayments or potential exposure.

Ohio law deems contractors the “consumer” of tangible personal property installed into real property if it remains real property after installation.[1]  As the consumer, the contractor would pay sales tax to their supplier (or accrue Ohio use tax if no tax is charged by the supplier) based on the cost of the tangible personal property. For example, if a contractor is hired to replace a load bearing wall in a building, the contractor would be the consumer of the materials used in completing that project.

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