The current Commercial Remodel Sales Tax (Texas Administrative Code, Title 34, Part 1, Chapter 3, Subchapter O, Rule 3.357 and Rule 3.291) creates massive headaches for the construction industry. That's why I, Jim Benge, have developed this coalition. The goal is for Texas commercial contractors to band together to tackle this issue head-on.
The Commercial Remodel Tax collected by the Texas State Comptroller is an arbitrary tax that does not consider profit. As a contractor, if you collected any money during a commercial remodel, you owe the state 8.25% of it whether you made a profit or not and regardless of if the client made their final payment or not.
On top of that, commercial remodeling is the only sector required to collect taxes on the labor of projects. The tax is not imposed on new commercial construction or on any residential construction, new or remodel. This odd and arbitrary arrangement creates an aggravating marketplace for contractors and commercial clients alike.
There is no way to enforce this law, and the advantages of dodging the tax make breaking the law the better option for many contractors.
Many contractors do not have the Texas Sales and Use Permit, which is required by law, and they are bidding against those contractors who are properly licensed and following the law. This creates an uneven playing field between those who do and don't collect and remit the tax. But it is not the contractors who are wrong in this case; it is the tax law.
Together, let's forge a sensible solution that serves Texans better. Will you join us?
