Flooring Contractor Is Stuck Owing $1 Million California Use Tax

A construction contractor is liable for about $950,000 in use tax because the company consumed the flooring materials it purchased, a California tribunal announced Monday.

A California Department of Tax and Fee Administration audit found that HM Carpet Inc. made unreported purchases totaling about $8.74 million that were subject to use tax. HM Carpet, which issued resale certificates to its vendors for about 90% of its flooring material purchases, argued the certificates were invalid because some weren’t signed by authorized individuals.

• The California Office of Tax Appeals said a party can’t issue a resale certificate and then try to shift ...