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Construction tax matrix

Type of Contractor B&O Tax Retail Sales Tax Use/Deferred Sales Tax
General or prime contractor: Performs work for others at retail. Does not own the real property. This is referred to as custom construction. Subject to retailing B&O tax classification. Sales tax is collected and due on the total contract price. Contractor pays sales/use tax on all materials consumed by him (tools, sandpaper, etc.) Does not pay sales tax on materials which become a permanent part of the building. May use a reseller permit to purchase these items.
Subcontractor (custom construction): Performs work for others at wholesale. Does not own the real property. Hired by general or prime contractor to perform all or portion of contract. Subject to wholesaling B&O tax classification, if provided a reseller permit by general or prime contractor. Otherwise, retailing B&O tax classification. If general or prime contractor provides reseller permit to subcontractor, then does not collect retail sales tax on contract price. Otherwise, sales tax due on total charge to general contractor. Contractor pays sales/use tax on all materials consumed by him (tools, sandpaper, etc.) Does not pay sales tax on materials which become a permanent part of the building. May use a reseller permit to purchase these items.
Speculative builder: Constructs residential or commercial buildings on land he owns. No B&O tax due on sales of property. The sale of property is subject to real estate excise tax. Does not collect retail sales tax on the sale of the property. Builder must pay sales/use tax on all materials used and on all billings from other contractors.
Public road contractor: Builds roads for cities, counties, and the federal government. Does not include roads built for Washington State. Note: Comments apply whether prime or subcontractor. Subject to the public road construction B&O tax classification on the gross contract price. Does not collect retail sales tax on road work where the road is a city, county, or federal road. Roads for the state of Washington are subject to sales tax. Follow rules above for general contractor. Contractor is defined by law as the consumer and must pay sales/use tax on all materials used, applied, or installed by him.
Logging road contractor: Builds logging roads in conjunction with logging parcels of land. Subject to the B&O tax under the extracting classification on the gross contract price. Does not collect retail sales tax on charges for building logging roads. Contractor is defined by law as the consumer and must pay sales/use tax on all materials used, applied, or installed by him.
Government contractor: Construction to real property for the federal government. Does not apply to road construction. NOTE: Taxability the same for both prime and subcontractor. Subject to the B&O tax under the government contracting tax classification on the gross contract price. No sales tax collected from the federal government. Contractor is defined by law as the consumer and must pay sales/use tax on all materials used, applied, or installed by him.