Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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190.0000 CONSTRUCTION CONTRACTORS—Regulation 1521

Annotation 190.2675


190.2675 Materials Purchased In State for Use Out of State. Contractors holding California seller's permits may present exemption certificates as authorized by section 6386 and thereby cause the sale of materials to be exempt from sales tax even though the contractor might take delivery of the property in this state for its use in an out-of-state construction contract.

If the contractor does not hold a California seller's permit, it is still possible to purchase the materials under a resale certificate by presenting information as to seller's permits held in other states. The use of such a certificate is authorized only in those instances in which the contractor cannot at the time of purchase determine whether the materials will be sold or incorporated into realty in the process of performing a construction contract. If the materials are purchased for a particular job in California rather than addition to inventory, tax would apply. Even if the materials are placed in inventory, said inventory must be of the type from which outright sales are made and from which withdrawals are made in connection with out-of-state construction contracts.

If a state does not have a sales or use tax law, there is no possibility that a construction contractor would be defined as a retailer of the items used in the process of improving real property. Sales will, therefore, be taxable unless within the exemption mentioned above or unless the out-of-state person's transfers in fact qualify as retail sales under the California Act even though they are not made in this state. 2/7/61.