The taxpayer protested an assessment of gross receipts tax that was based on the business income reported on his 2001 federal income tax return. The taxpayer, who engaged in the business of home repair, purchased materials under his own name. Upon completion of a job, he charged the home owner based on time worked plus the cost of materials. The taxpayer argued that he was exempt from gross receipts tax because he was acting as an employee and not as an independent contractor. He also argued that he should not be taxed on receipts attributable to the cost of materials because he paid tax at the time of purchase and did not add a mark-up when billing his clients. The hearing officer found that the taxpayer did not fall within the statutory definition of an employee and was, in fact, doing business as an independent contractor. The hearing officer also found that taxation of the taxpayer’s total receipts, including the cost of materials, did not result in double taxation. The protest was denied.
Bruce A. Kelly