You probably already know that when you become involved in a
project outside your home state, you need to be mindful of issues
such as licensing, qualification and authorization to do business,
and workers' compensation and other insurance requirements. But one
area that can be confusing and often overlooked is how a state's
sales and use taxes apply to contractors and their material
purchases.
For example, will you owe tax on the value of an out-of-state
contract? Will you have to pay sales tax on your material
purchases? Are exemptions available? Will you have to submit a bond
to cover taxes? Does it make a difference whether your contract is
stated on a lump sum or time and materials basis?
Because failure to properly pay taxes could result in a job
being stopped by state authorities and/or possible monetary
penalties, you should know the answers to these questions before
negotiating or bidding on a job in another state. And because
states have different tax laws and those laws' effects on you can
be significant, you should have a basic understanding of what sales
taxes may apply before starting or even bidding a job in another
state.
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