Legal Question in Construction Law in California

You need to have a policy discussion with your employer. If it has a sales tax reseller's permit, as it sounds, then the solution may be that you should not be paying sales tax on stuff you buy, because it is for resale. It probably depends upon the extent to which the material is re-worked or modified between purchase and installation. You can always ask the Board of Equalization's advisors for their opinion.

Mr. Whipple is wrong about the extent to which materials are worked or modified between purhchase and installation in construction making any difference to the taxation. The construction industry is subject to special Board of Equalization regulations. Sales tax is due on the cost of materials to the contractor, and the retail price of fixtures, but no tax is due on overhead, profit or labor, for original construction or installed renovation or remodeling work. This means the contractor has two options: 1. Pay sales tax to the supplier when the materials and supplies are purchased, and pass the total (tax included) on to the clients in the bid or the time and materials charges; or 2. Obtain a resellers license, buy the materials and supplies tax-free, charge the client tax on the materials (but not the labor, overhead or profit), submit the tax to the Board of Equalization monthly or quarterly (depending on what category you come under), and file an annual sales and use tax return. I think you can see why every contractor I've ever known, from mom & pop painters to Tutor-Saliba and O.C. Jones, just pays sales tax on materials when they buy them and just passes that along to the project owners. What you cannot do is pay sales tax when you buy the materials and supplies, charge the customer the full price you paid (including tax) and then charge the client tax again on the materials, and you cannot charge tax at all on labor, overhead and profit. The reason you cannot do that is because it would be fraud to charge a price, then add up to 9.5% "tax" depending on the county, when you wouldn't owe "tax" to the Board of Equalization and you would just be pocketing the extra money.