Friday, May 24, 2013

Contractor: Ketchum and Tax Commission rules donít jive

Says it has Ďreal monetary implicationsí

Express Staff Writer

Construction worker Juan Balencia works on a building remodel in downtown Ketchum on Wednesday. One city contractor is saying the city should not make him pay local-option taxes on building materials. Photo by Roland Lane

     A Ketchum contractor voiced concerns at a City Council meeting Monday about a possible inconsistency between the city and the Idaho State Tax Commission as to whether contractors are required to collect the city’s local-option tax on building materials.

     Drywall contractor Bill Glenn said the Tax Commission, which the city hired earlier this month to administer the LOT, defines contractors such as himself as “consumers,” who are not required to collect such a tax for the city, as opposed to “vendors,” who are. According to Glenn, the suppliers that sell building materials to contractors are the “vendors” and should be required to collect the tax, not the contractors. He said the city also defines contractors as consumers, but if a contractor’s vendor didn’t collect the tax, the city expects the contractor to, which he said doesn’t “jive” with state law.

     “When I’m defined as the consumer, I cannot also be the seller,” he said. “My accountant agrees with me, my attorney agrees with me and the regional auditor for the State Tax Commission agrees with me.”

     Randy Tilley, an administrator for the state Tax Commission, said in an interview after the meeting that “the contractors are the consumers” and as such are not responsible for the tax if their vendor has not charged it.

     “We’re responsible for making sure those vendors charge and collect the tax,” he said. “If the retailers are not properly collecting the [LOT], we’ll be looking at pursuing that issue with the retailer to make sure they’re educated on their responsibilities for collecting the Ketchum tax.”

     Councilman Baird Gourlay said at the meeting that retailers include firms such as Home Depot and Lowe’s Home Improvement and that the “intention” is for them to collect the tax. However, Glenn said that might be the intention of both the city and the Tax Commission, but in reality contractors are getting the short end of the stick.

     “I have builders telling me they won’t hire me if I don’t have a retail sales tax permit,” he said. “The state says I don’t need one.”

     Glenn said he’s been discussing the issue with the city for about six weeks, but he’s still right where he started.

     “Time is of the essence,” he said. “It has real monetary implications.”

     City Attorney Stephanie Bonney offered to speak with the Tax Commission to “come to a consensus” between it and the city.

     Mayor Randy Hall said the city has to straighten the situation out. In an interview after the meeting, he said Glenn’s a “great guy” and that it’s just a “misunderstanding between what Bill’s trying to say and how we’re interpreting that.” He said the city’s legal team is looking into the issue and will clarify it soon.

     “The sky’s not falling, and I’m confident we’re not doing anything wrong,” Hall said.

     He said the issue will be addressed at the next City Council meeting on Monday, June 3.”

Brennan Rego:

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