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We are a Texas construction company doing a subcontracting job in Louisiana. We are ordering material from Texas suppliers to be shipped to the job site in Louisiana. Do we pay Texas sales tax to the supplier or do we pay Louisiana use tax?
ANSWER
Expert Jen Deal's Answer:
The state of Texas does not require suppliers to collect sales tax on merchandise shipped out of state.
However, regarding sales and use taxes, Louisiana requires "Nonresident contractors and subcontractors who operate in Louisiana and who enter into contracts in which the total contract price is $3,000 or more, to register each contract with the Department of Revenue. Please note that the sales or use taxes you pay in Louisiana will depend on the type of subcontracting you are doing and how you bill your services to the general contractor. Since you mentioned materials, not supplies, you would generally be required to charge sales tax on the marked-up sales price of materials to the general contractor. If you purchased supplies from out of state which were used up or consumed in your services, those you would pay a use tax on the cost paid. With regard to the sales tax charged to the general contractor, talk to the contractor. The contractor may be exempt from sales taxes as a wholesale purchaser (depending on the type of contract work) or because their customer is exempt from sales taxes.
References: Texas Administrative Code Section 3.291; Louisiana Administrative Code Title 72, Chapter 3, Section 301
State: Texas, Louisiana
Sales tax category: Tax Nexus, Use Tax
Product/Service: Construction
