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Sales Tax on Construction Materials

Three weeks ago AGC of Greater Milwaukee unsuccessfully requested that Governor Walker put our proposal to fix the sales tax law on construction materials for tax exempt entities in the State Budget Bill. As such, I am working with various other construction associations to have our proposal introduced as a budget amendment in the Joint Finance Committee. Joint Finance has begun working on the budget. Additionally, at the request of the AGC, Rep. Andre’ Jacque and Senator Glenn Grothman have introduced a separate bill.

Under existing law, materials used to assemble a building owned by a tax-exempt organization cannot be purchased by the contractor on the job and then re-sold to the tax-exempt owner without paying the sales tax. The Wisconsin Department of Revenue considers the contractor who purchases the building materials to be the final consumer, and therefore, they materials are subject to sales tax. This exercise obviously is a detriment to the tax-exempt entity. Under our proposal, the law would allow a contractor to purchase the construction materials that go into the construction of a building and sell it to a tax exempt entity, thus eliminating the sales tax on applicable materials.
We have been advised that AB 76 (Sales Tax on Construction Materials for Tax exempt Entities) had a public hearing scheduled for Wednesday, April 3, 2013. We will bring you an update of this hearing directly. In the meantime, we urge all AGC Members to contact their state legislators and inform them of their support for AB 76.

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