When the taxpayer started his business, he called the Department to ask whether he was required to use NTTCs. A Department employee explained that NTTCs would allow the business to purchase materials without paying the supplier’s passed-on cost of gross receipts tax, but that use of NTTCs was voluntary. The taxpayer incorrectly assumed, but did not verify with the Department, that choosing not to use NTTCs when purchasing materials would relieve the taxpayer from paying gross receipts tax on his resale of the materials. When billing customers, the taxpayer separated the cost of materials from the cost of labor and charged gross receipts tax only on his labor. In 2004, the Department assessed the taxpayer for additional gross receipts tax (plus interest) due on his receipts from the resale of materials. The taxpayer protested the assessment, arguing that it resulted in double taxation and that he had been misled by the Department employee who told the taxpayer that use of NTTCs was voluntary. The hearing officer denied the protest, finding that there was no double taxation and that the information provided by the Department employee concerning the use of NTTCs was correct.
Kevin’s Kustom Welding