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BTLG Table of Contents > Sales and Use Tax Annotations > C > 190.0000 Construction Contractors > Annotation 190.6805

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C

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190.0000 Construction Contractors—Regulation 1521

Annotation 190.6805

(e) Fixed-Price Contracts

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190.6805 Withdrawal from Ex-Tax Inventory After Tax Rate Increase. A construction contractor purchased construction materials ex-tax under resale certificates. It reported and paid tax on the materials when they were sold or when they were withdrawn from inventory for use by the contractor on construction contracts.

The contractor entered into fixed price construction contracts. Subsequently, a transit tax was imposed in the district in which the contract was performed. Although the contractor was obligated under the fixed price contracts, the higher tax rate applied because the exclusion from the increase applied only to transactions involving the sale of the property. The construction contractor had purchased the materials before the tax increase. The taxable event was the withdrawal from inventory for the purpose of consumption. There is no exemption from transit tax for property withdrawn from an ex-tax inventory for use on fixed price construction contract even though such contracts were entered into prior to the effective date of the tax. 6/23/94.