Common use of Sales and Use Tax Clause in Contracts

Sales and Use Tax. The Contractor shall coordinate with the Owner to ascertain whether sales or use tax may be collectible on the purchase of building materials, supplies, and equipment used on the Project by the Contractor. Some cities and municipalities will charge sales or use tax on building materials, supplies, and equipment “picked up” and/or used within that city or municipality by a Contractor. Whenever possible, the Contractor shall have building materials, supplies, and equipment for the Project delivered to the construction site by common carrier, conveyance by the seller, or by mail, to avoid city or municipal sales and use taxes for which refunds will not be made. The Owner is exempt from the payment of any state sales and use taxes for materials, supplies, and equipment used on the Project by the Contractor and subcontractors. For the purpose of exercising such exemption, the Contractor and all its subcontractors shall apply for and obtain a certificate of exemption for the Work from the Colorado Department of Revenue. Copies of such certificates shall be filed with the Owner before any materials are purchased or any Work commenced hereunder. No amounts paid to Contractor pursuant to the Construction Agreement shall include reimbursement for such taxes. At the time of final completion, if required by the local jurisdiction, the Contractor and his subcontractors shall execute affidavits, in duplicate, showing the amount of local municipal sales or use taxes, if any, paid by the Contractor or subcontractors upon materials used on the project, which affidavits shall further state that all such materials have been "built in" to the project, and where books and records and other substantiating evidence of payment of said tax are located and where they may be examined by appropriate governmental authorities, if such examination is required. The Contractor and all subcontractors shall maintain sufficient records to verify the amount of sales and use taxes paid to any local governmental entity. Failure to keep such records, resulting in the inability of the Owner to claim a refund for sales and use taxes for such materials, if allowed, shall render the Contractor or subcontractor liable for the amounts of such tax refund as determined by the Architect's/Consultant's cost estimates of such materials.