I had a question from a webinar participant last week about the "landmark exemption." I had to honestly respond that I didn't have a clue about what he was talking about. In a subsequent exchange of emails, I figured out that Texas has an unusual and obscure exemption for contractor's services performed on buildings that are the National Register of Historic Places.
I've been doing training on Texas sales and use taxes for eight years and that's the first time I'd ever heard of it. My excuse is that Texas has some of the more spectacularly complicated rules about contractors. And this is a pretty obscure rule. In order to find information on it, I finally had to resort to doing a text-search for "historic" in my RIA database. But once I figured out what was going on, I found that there were a couple of good lessons for you folks.
First of all, who would have thought there was an exemption such as this? I did some additional research in other states and only found one other state, Connecticut, that has a generic exemption for construction related costs on historic buildings. TWO STATES! There are a couple of other exemptions floating around, but they tend to be for specific projects such as a YWCA building in DC, provide tax credits if the projects promote tourism, or are for projects covered by non-profit organization exemptions.
I find it hard to justify this exemption. The tourism related credits I get - there's a tax revenue pay-off for the state that will probably offset the credits. But, with states desperate for money, they're giving exemptions for restoring a historic building? Now I am a big fan of historic places - they're one of my photography projects. But is the presence or absence of a tax credit really going to have an affect on an owner's decision about restoration? I'll bet the net result is that some well connected folks get some tax benefits, and the state loses a lot of money unnecessarily. Sigh.
The second point is that there are some really obscure exemptions out there. Always be looking to take advantage of the lack of common sense on the part of our elected representatives. Pay particular attention to continuing transactions that will result in big dollars, as well as the one-off big deal. And, now that you've read this, keep an eye out for historic site exemptions while you're at it.
Finally, to complete the discussion about historic places, there's another exemption that is a little more common. Many states impose sales tax on admissions charges. And many of those states grant exemptions for admissions to historic sites.
The Sales Tax Guy
See the disclaimer - this is for education only. Research these issues thoroughly before making decisions. Remember: there are details we haven't discussed, and every state is different. Here's more information
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