SALT Report 1162 – West Virginia has adopted regulations regarding a per se exemption from consumers’ sales and service tax and use tax for contractor purchases used in public service districts or government owned water and sewer utilities.
The exemption applies to purchases of services, machinery, supplies, and materials (excluding gasoline and special fuel) for direct use in the construction, alteration, repair, or improvement of a new or existing public utility structure or system, when provided by a contractor or subcontractor to a public utility.
Given that the exemption is per se, no exemption certificate is required to claim it. A contractor or subcontractor can either pay the applicable sales tax and claim a refund from the State Tax Department or use Form WV CST-286 (Special Contractors Exempt Purchases Certificate) and note the public utility’s tax identification number for each qualifying purchase.
Penalties apply for all unauthorized use of the exemption. For example, a contractor’s business registration certificate can be suspended or revoked if the contractor issues a CST-286 for a purchase that is not used in a tax-exempt manner. In addition, a penalty of up to 50% of the tax due will be added to the original tax amount.
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