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AGC Supports Two-Year Sales Tax Permit – But Start It Earlier

Legislation would allow contractors to apply for a Resellers Permit every two years rather than annually. AGC strongly supports that but will seek changes to another element of the bill.

The legislation (Senate Bill 6551 and House Bill 2758) would put off implementation of the two-year permit until July 13 2013. “It is unfair and unnecessary to delay implementation of this provision” AGC Government Affairs Director Rick Slunaker said in testimony on the measure. “Assumptions of possible revenue loss due to earlier implementation are questionable. Annual processing of permit applications and potential appeals are costly time-consuming and cause untenable planning difficulties for contractors and the Department of Revenue.”

AGC will seek to amend the bill’s effective date and will pursue an amendment to address current law’s “look back” period that establishes an eligibility threshold for contractors’ qualifying for issuance of a seller’s permit.

“If a contractor’s total dollar amount of business activity drops below 25 percent of taxable construction issuance of a seller’s permit is jeopardized” said Slunaker. “Use of a 12 month ‘look back’ in calculating market-sector activity in determining the 25 percent taxable activity threshold could be problematic for contractors and the Department when economic conditions cause many contractors to perform a greater proportion of their business as projects for government agencies which aren’t subject to sales tax. This makes achieving the 25 percent threshold more difficult than normal. As the economy improves these contractors’ mix of business will fluctuate gravitating more to a normal mix of private sector and government projects. Calculating future permit eligibility based on 12 months of non-qualifying construction activity will make achieving the 25 percent threshold more difficult; resulting in more requests for special permit handling and appeals of permit denials.”

SB 6551 is in the Senate Ways and Means Committee. It is sponsored by Sen. Tom. HB 2758 is in the House Finance Committee. It is sponsored by Reps. Hunter Condotta Kessler Orcutt.

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