When Do Construction Contractors Pay Sales Tax on Materials for Resale?

Most states require construction contractors, as consumers, to pay sales and use tax on purchases of supplies and materials. It is important to note that some states may provide exemptions that allow contractors to purchase supplies and materials for resale.

However, where a state does not allow contractors to purchase materials for resale, the state may provide a mechanism for applying for a refund or credit for sales taxes paid on such purchases, particularly when a third party is involved (for example, a subcontractor).