Greg & Kimberly Hayes

07-21

The Taxpayer owned a corporation that acted as an independent sales representative for a manufacturer of home packages.  As a marketing tool, the Taxpayer constructed a home using the same materials included in the home package.  Because the Taxpayer did not have a contractor’s license, he obtained an owner/builder permit and paid gross receipts tax on his purchase of services and materials.  For over a year, the Taxpayer used the completed home as an office and a model to show potential customers what they could expect when they purchased a home package.  The Taxpayer subsequently sold the home to a couple who asked to buy the model rather than construct a similar home from a package.  The Taxpayer did not report gross receipts tax on the sale.  The Taxpayer had obtained a contractor’s license following completion of the first home and, after it was sold, proceeded to build and sell three more homes.  At the time he built his second home, the Taxpayer was not aware of the use of NTTCs and paid gross receipts tax on his purchase of construction materials and labor.  The Taxpayer did not report gross receipts tax on the sale of the second home.  Upon audit, the Taxpayer was assessed for unpaid gross receipts tax on the sale of the first two homes.  The Taxpayer protested, arguing that the sales were isolated and occasional.  In the alternative, he argued that he should be given credit for the gross receipts taxes paid to his vendors.  The hearing officer held that the sale of the first model home qualified as isolated and occasional and no gross receipts tax was due.  Once the Taxpayer obtained a contractor’s license, he was in the construction business and owed gross receipts tax on the sale of the second home.  The Taxpayer’s lack of knowledge concerning the use of NTTCs did not entitle him to a credit for taxes paid to his vendors.  Protest granted in part and denied in part.