Construction contractor; buyer-based exemption; appointment of purchasing agent; procedure; failure; client; apply for refund

(1) This section applies on and after July 1, 2026.

(2) The appointment of purchasing agents shall be recognized for the purpose of permitting a construction contractor to purchase materials tax free based on the buyer-based exemption of the contractor's client for items that are physically annexed to the structure and which subsequently belong to the client who is eligible for the buyer-based exemption. The appointment of purchasing agents shall be in writing and occur prior to having any buyer-based tax-exempt items annexed to real estate in the construction, improvement, or repair. The contractor who has been appointed as a purchasing agent may purchase the materials tax free or may apply for a refund of or use as a credit against a future use tax liability the tax paid on inventory items annexed to real estate in the construction, improvement, or repair of a project that belongs to the client who is eligible for the buyer-based exemption.

(3) A client described in subsection (2) of this section which enters into a contract of construction, improvement, or repair with respect to buyer-based tax-exempt items annexed to real estate without first issuing a purchasing agent authorization to a construction contractor prior to such items being annexed to real estate in the project may apply to the Tax Commissioner for a refund of any sales and use tax paid by the contractor on such items physically annexed to real estate in the construction, improvement, or repair.

(4) For purposes of this section, client means a nonprofit entity.