- Virginia has issued a ruling on the tax obligations of real property contractors who incorrectly treated themselves as retailers for sales tax purposes
- The state has introduced new legislation offering one-time sales tax relief for such contractors
- This relief allows contractors to receive a credit for the sales tax they collected from customers against the use tax assessed on their material purchases
- The legislation was signed by Governor Youngkin on March 20, 2024, and will be effective from July 1, 2024
- Contractors typically pay tax on materials used in construction projects and do not collect sales tax from customers
- If a contractor mistakenly does not pay sales tax on materials and charges it to customers, they may face an audit and be assessed for unpaid sales tax on materials
- Historically, Virginia did not allow contractors to offset this tax liability with the sales tax collected from customers
- The new ruling and legislation aim to correct this by allowing a one-time credit for mistakenly collected sales tax
- Contractors in Virginia are advised to review the new tax relief options with the help of tax professionals like Aprio’s State and Local Tax team
Source: aprio.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
