As part of an ongoing effort to help Texas businesses ensure they comply with state laws, the Texas Comptroller of Public Accounts has initiated an outreach program to help educate homebuilders about their tax liabilities on homes that they build and sell.
Homebuilders generally build and sell new homes for a single amount. According to the Comptroller’s office, for sales and use tax purposes this single amount is referred to as a lump-sum contract and includes the materials incorporated into the structure, labor charges, overhead and profit.
Homebuilders using a lump-sum contract are not required to collect sales tax on the lump-sum selling price of the home, but they must pay sales or use tax to suppliers located in Texas when purchasing, leasing or renting taxable items needed to complete the home. Items purchased from sellers and vendors located outside of Texas that are brought or shipped into the state also require a sales or use tax be remitted to the Comptroller’s office unless that seller collected and provided a receipt for the Texas use tax.
Examples of taxable items could be: materials (lumber, drywall, concrete, bricks, flooring, plumbing and electrical), consumable items (sandpaper, form lumber, electricity) and equipment (backhoes, cranes, specialty tools, etc.).
One-Time Waiver of Penalty & Interest
The Comptroller is offering a one-time waiver of penalty and interest on sales and use tax owed if you voluntarily remit it to their office. This waiver is available to homebuilders who do not hold a Texas Sales and Use Tax Permit and who have not been previously contacted by the Comptroller’s office regarding sales and use tax owed.
As part of the Comptroller’s outreach, some homebuilders may receive a letter from the Comptroller regarding the proper collection and remittance of sales and use tax. The letter will ask the homebuilder to review their records to determine if they have purchased any items for which the seller did not collect Texas tax, and explain how to remit any tax due. The time period for this waiver is for taxable transactions during the period of August 1, 2012 through July 31, 2016.
If you have questions about this effort or how it might apply to you, please call 1-800-688-6829 or 512-305-9899, ask for a Business Activity Research Team member, and inform them you are calling regarding the homebuilder project.