HB419 Summary

• Department of Revenue shall issue certificates of exemption from state and local sales and use taxes to contractors and subcontractors licensed by the State Licensing Board for General Contractors for purchases of building materials and construction materials on governmental entity projects, excluding highway, road, or bridge projects.

• Exemption certificates apply only to tangible personal property that becomes part of the structure being constructed; contractors must maintain accurate cost accounting of all purchases and file annual reports as a prerequisite to certificate renewal.

• Contractors or subcontractors who intentionally misuse exemption certificates are subject to civil penalties of at least $2,000 or two times the sales or use tax due, and may be barred from using exemption certificates for up to two years.

• Bid forms for tax exempt projects must account for tax savings; the act is intended to lower administrative costs for governmental entities, contractors, and subcontractors while not changing the basis for determining professional services pricing.

• Act becomes effective January 1, 2014 for contracts entered into on or after that date and does not apply to contracts, change orders, or extensions of contracts entered into before January 1, 2014.