A road contractor’s lease of traffic maintenance property, (barrier walls, traffic signs, etc.,) to ODOT during road paving projects has historically been subject to sales tax. Ohio courts may be starting to pivot and move. Recently, Ohio’s Ninth District Court of Appeals, recently ruled that traffic maintenance equipment is not a retail sale when the contractor purchases or leases the equipment to then rent it to ODOT. The Court held that a contractor’s purchase of traffic maintenance property was entitled to the resale exemption, and its subsequent rental to the State of Ohio was also tax exempt. And why not? ODOT demands the equipment be included. ODOT controls the type, quantity and placement of the equipment. ODOT certifies its location and manages the equipment throughout ODOT’s project. Isn’t it clear then that ODOT possesses and uses the traffic maintenance equipment throughout its projects? Go for the exemption, WOW!
John Swansinger is the author and founder of YouDig?, is a partner in Buckingham, Doolittle & Burrough, LLC‘s real estate and construction practice group and is the Cleveland Office Partner in Charge. He works with contractors, developers and construction owners on construction law issues including construction contracts, commercial agreements, construction litigation, subcontractor issues, insurance liability, breach of contract and more. He can be reached at firstname.lastname@example.org or 216.615.7356.
YouDig is an online resource that connects the construction community with vital issues affecting the industry and is a component of the business law firm Buckingham, Doolittle & Burroughs, LLC that is specifically geared toward construction.