Dear YouDig? Don't Tax the Messenger

Buckingham, Doolittle & Burroughs, LLC
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Buckingham, Doolittle & Burroughs, LLC

Dear YouDig?,
 
As an Ohio highway contractor we must include an incredible amount of temporary structures on our jobs and even temporary personnel from time to time. We don’t understand why we are getting popped with paying sales taxes on the purchase of these temporary structures and people. We are not a retail store selling to an end user. ODOT nails us on the price of the job and the Tax Commissioner won’t allow fair exemptions.
 
-Why O’Why
 
Dear WOW,
 
A road contractor’s lease of traffic maintenance property, (barrier walls, traffic signs, etc.,) to ODOT during road paving projects has historically been subject to sales tax. Ohio courts may be starting to pivot and move. Recently, Ohio’s Ninth District Court of Appeals, recently ruled that traffic maintenance equipment is not a retail sale when the contractor purchases or leases the equipment to then rent it to ODOT. The Court held that a contractor’s purchase of traffic maintenance property was entitled to the resale exemption, and its subsequent rental to the State of Ohio was also tax exempt. And why not? ODOT demands the equipment be included. ODOT controls the type, quantity and placement of the equipment. ODOT certifies its location and manages the equipment throughout ODOT’s project. Isn’t it clear then that ODOT possesses and uses the traffic maintenance equipment throughout its projects? Go for the exemption, WOW!

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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