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Lucisano Bros, Inc. v. Director, New Jersey Division of Taxation

A-6466-00T5 (N.J. Super. App. Div. 2003) (Unpublished)

TAXATION; CONTRACTORS—Unless a contractor assumes liability to pay sales tax through a direct payment certificate, the responsibility to pay sales tax rests with the construction material supplier.

The Director of the New Jersey Division of Taxation determined that a Pennsylvania building material supplier that occasionally sold building materials to contractors in New Jersey was required to register its business with New Jersey and file monthly sales tax returns. The supplier argued that there was an exemption to the Sales and Use Tax Act that does not require a building material supplier to pay the sales tax because the tax is to be paid directly by the contractor. The Court rejected the supplier’s argument. In order to prevent contractors and vendors from avoiding paying sales tax, a vendor is obligated to pay sales tax on building materials sold to a contractor unless the contractor was issued a direct payment certificate. A contractor without a direct payment certificate would have no incentive to pay the sale tax on its own. Therefore, unless the contractor assumes such responsibility, the responsibility to pay the sales tax rests with the supplier, as it does with all other vendors.

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