Wednesday, June 5, 2013

Contractors shouldn?t collect LOT


    The article in the Friday, May 24, edition of the Mountain Express entitled “Contractor: Ketchum and Tax Commission rules don’t jive” contained a photo caption which read: “One local contractor believes he shouldn’t have to pay the local option tax on building materials”. That caption completely misrepresented the subject of the discussion, which was not the validity of the local-option tax (LOT), it being applied to building materials, or who should pay it.  The issue under discussion was who is responsible for assessing, collecting and remitting the tax to the city of Ketchum.
    Idaho law defines a contractor improving real property as the consumer of the goods purchased for the purpose, whether or not the goods are resold (Idaho Code 63-3609).  This means that sales tax must be charged to such contractors when they buy materials to improve real property. There’s a simple reason for this: Since improvements on real property are not subject to sales tax when the property is sold, the sales tax is captured at the time the building materials are sold to the various contractors who construct the improvements.  The cost of the sales tax must be incorporated into contractors’ pricing, and cannot be added to the bill as sales tax, because contractors improving real estate are prohibited from charging sales tax.
    The city of Ketchum has been classifying contractors improving real property as resellers/retailers, requiring an active sales-tax permit, and imposing upon them the duty of assessing, collecting and remitting the local sales tax.  This is how it works for retail merchants, but these requirements are unquestionably contrary to the state law that defines contractors improving real estate as consumers. While consumers pay the sales tax, the duty of assessing, collecting and remitting the tax is solely the responsibility of the sellers; contractors have no such duty.
William Glenn
Ketchum




About Comments

Comments with content that seeks to incite or inflame may be removed.

Comments that are in ALL CAPS may be removed.

Comments that are off-topic or that include profanity or personal attacks, libelous or other inappropriate material may be removed from the site. Entries that are unsigned or contain signatures by someone other than the actual author may be removed. We will take steps to block users who violate any of our posting standards, terms of use or any other policies governing this site. Use of this system denotes full acceptance of these conditions. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.

The comments below are from the readers of mtexpress.com and in no way represent the views of Express Publishing, Inc.

You may flag individual comments. You may also report an inappropriate or offensive comment by clicking here.

Flagging Comments: Flagging a comment tells a site administrator that a comment is inappropriate. You can find the flag option by pointing the mouse over the comment and clicking the 'Flag' link.

Flagging a comment is only counted once per person, and you won't need to do it multiple times.

Proper Flagging Guidelines: Every site has a different commenting policy - be sure to review the policy for this site before flagging comments. In general these types of comments should be flagged:

  • Spam
  • Ones violating this site's commenting policy
  • Clearly unrelated
  • Personal attacks on others
Comments should not be flagged for:
  • Disagreeing with the content
  • Being in a dispute with the commenter

Popular Comment Threads



 Local Weather 
Search archives:


Copyright © 2019 Express Publishing Inc.   Terms of Use   Privacy Policy
All Rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Express Publishing Inc. is prohibited. 

The Idaho Mountain Express is distributed free to residents and guests throughout the Sun Valley, Idaho resort area community. Subscribers to the Idaho Mountain Express will read these stories and others in this week's issue.