West Virginia – Contractor Entitlement to Pass-Through Exemptions

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SALT Report 1190 – The West Virginia State Tax Department has issued guidance regarding changes to regulations that govern contractor exemptions. The most recent change was noted in S.B. 247, Laws 2011, which exempts certain contractor purchases from sales, service, or use tax on tangible personal property. Qualifying items must be installed in, or directly used or consumed in, the construction or expansion of a warehouse or distribution facility that employs at least 300 full-time employees.

The exemptions apply to purchases of building materials and certain tangible personal property. The amendment also includes, as a refundable exemption, the qualified purchase of computers, computer software, material handling equipment, racking and racking systems, for certified distribution facilities.

Contractors can claim the warehouse and distribution facility exemption by:

  • Filing a refund claim with the department after paying the appropriate amount of sales tax, or,
  • If the principal has a direct pay permit, the contractor may use Form WV CST-286 “Special Contractors Exempt Purchases Certificate.”
All purchases of tangible personal property must remain on the construction site after construction is completed to be eligible. Rentals of cranes, bull dozers, and other equipment specifically for use on the job by the contractor, or the hiring of a subcontractor to provide bulldozer services or crane services, along with a machine operator qualify for the exemption.
However, the warehouse and distribution facility exemption does not apply to purchases of gasoline or special fuel, nor does it apply to purchases of tools, bulldozers, cranes, etc., that become the property of the construction contractor and/or will be removed from the site after construction is completed.
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