I'm in a different state, but AFAIK they all work the same way. The number you're applying for is actually a resale number. You can use that resale number to purchase things for resale and not pay sales tax to your supplier. The reason for doing this is that you will be selling the stuff to someone else, and charging and remitting the sales tax at that point in time. It's to avoid double taxation.

If you get the resale license/number and then use it to purchase stuff tax-free that you will not resell, then you are committing tax fraud.

An individual cannot qualify for a Tax ID number unless that individual has a business reselling the merchandise, or is a 501 c3 church, or government, purchasing materials for use in the church or for a government installation. Your flooring installer can purchase the material tax free because he is reselling it to you along with his install labor. The taxes are paid by him. Your builder can get a tax ID number to purchase the materials to build your house, but he has to collect the tax at selling time from you in addition to the purchase price. If you are building a church, then you may be able to obtain a tax ID for all of your building materials, but you would need to pass the IRS audit test.

Thank you for the responses. That makes a lot of sense.

The sales tax you pay on building materials may be deductible from your income taxes, though, since it is (well) above the standard amounts normally deducted. Keep scrupulous records, and give them to your tax preparer, or figure it out on your own. I save all my receipts, and keep a monthly spreadsheet so I can quickly see how much we've spent, and I break out things such as sales tax paid.

Capitol Improvement, vendor pays the sales tax. In New York State that is.

This post was edited by millworkman on Tue, Jan 13, 15 at 6:57

The IRSwill allow you to deduct your state & local income taxes OR your state & local general sales taxes but NOT BOTH so you would need to directly purchase a lot of construction materials in order to benefit from this option unless your state has no income tax.

You can use your actual expenses or use the optional sales tax tables plus actual sales tax paid on unusual items.

You can deduct the actual expense of sales tax if any of the following applies:

- If your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation.

- If you purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly.

- If, under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly.

If the materials are purchased in different years, the benefit may be decreased or nonexistent.

Don't dive into these matters without consulting a tax expert.

In Texas, on a new residential build:

If the builder is building the house for a lump sum he pays sales tax on everything that is taxable as he buys it. He does not collect any tax from you at all.

If the builder breaks it out and shows a price for labor and and a price for materials on the contract he must also add sales tax on the taxable items and collect it from you. He will use HIS sales tax resale number to buy materials for your house.

You can phone your state sales tax people and have them explain it to you just to make sure it's being done properly. Or google to find it on your state's tax website.