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Tax on Construction Materials

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The Town of Breckenridge does not impose a use tax.  Thus, contractors pulling building permits will not be required to pay a use tax deposit at the time of permit.  Nonetheless, contractors who perform construction work on real property within Town may be subject to obligations to license and collect Town sales tax and/or to pay to a licensed vendor Town sales tax based on various factors. Depending on circumstances, a contractor may be considered a consumer and required to pay sales tax to the seller on purchases they make. Under other circumstances, contractors may be considered retailers and required to collect sales tax from their customers. This guidance discusses who qualifies as a contractor, the tax treatment for purchases and sales a contractor might make, the tax implications of contract terms, sales tax licensing requirements applicable to contractors, and the application of Breckenridge sales tax to contractors. 

 As a contractor pulling a permit, this means that you will need to pay sales tax to your vendors for all taxable materials; the rate of tax applied to invoices will depend upon the point of delivery.  All materials delivered to a job site located within the Town of Breckenridge will be subject to the Town of Breckenridge sales tax of 2.5%, in addition to applicable State, County, and special district taxes.  Alternatively, materials that you take possession of in another municipality would be subject to that municipality’s tax rate.  This information also applies to your subcontractors and their vendors, and it is your responsibility to relay this important information to all involved on your project.

 

Contracts that you may enter into including those involving sub-contractors or construction related suppliers of windows, concrete, construction material, appliances, furniture, etc. are subject to Town taxation and require that the business possess a Town of Breckenridge business license.  From your perspective as the developer of the property, bids and invoices for such materials as named above, for example, should include appropriate estimates of sales tax that are required to be remitted by the supplier to the Town of Breckenridge, or other municipality, based upon the point of delivery.  Please keep this in mind when reviewing and approving any potential bid or contract.

 

Town staff experience has determined that sales have taken place in the construction industry that have not been properly taxed.  Whether this is due to a misunderstanding of the Code or an intentional disregard for current law has not been determined.  As a result, staff has continued to elevate educational efforts to familiarize the industry.  However, due to continuing non-compliance, extensive resources of the Town have been dedicated to collect what is lawfully due.  These efforts due include sales tax audits of construction projects, which sometimes result in a sizable assessment to the project for unpaid tax, penalty, and interest.

 

While Town staff is here to assist you, we strongly recommend that you become familiar with the various codes administered by the Town.  While some of the Town’s requirements are designed to ensure safety or promote our pristine alpine community, others such as our Sales Tax Ordinance are designed to ensure that there is an equitable business environment.

 

Chapter 1 of Title 3 of the Breckenridge Town Code clearly defines taxable transactions, including an extensive (but not all-inclusive) list of construction materials.  The Code further goes on to define “engaged in business in the Town” to include performing or providing services or selling, leasing, renting, delivering or installing tangible personal property for storage, use or consumption within the Town.

 

Chapter 1 of Title 8 of the Breckenridge Town Code, and the International Building Code, 2006 Edition, and International Residential Code, 2006 Edition requires that certain information be provided to the Town prior to the issuance of a Certificate of Occupancy or a Certificate of Compliance.  To aid you in complying with the Town’s requirement, a form called the Supplier Verification Form has been developed.  While use of the form is not required, you will need to supply the required information prior to receiving your Certificate of Occupancy or Certificate of Compliance. 

 

The purpose of the Supplier Verification Form is to provide information to the Finance Division setting forth the name, business address and telephone number of each contractor, subcontractor and material supplier who provided labor or materials in connection with the property for which the permit was issued.  This information is used to substantiate compliance with business licensing and sales tax provisions designed to ensure an equitable business environment within the Town of Breckenridge.  Failure to accurately provide this required information is in violation of Town Code and could result in prosecution for such a violation.

 

On behalf of all of us who work for the Town of Breckenridge, let me extend our thanks to you for choosing to pursue business in Breckenridge.  We also thank you for understanding this process and its importance in successfully providing an even and equitable business environment that is crucial to operating a first rate Town.

 

Please address any questions that you or your subcontractors/vendors  have on this process to the Town’s Revenue Services Administrator, via email WebsiteFinance@townofbreckenridge.com or via phone 970-547-3193.

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