All, My question in a nutshell: how have your municipalities avoided paying sales tax on large infrastructure projects through your public trusts? My municipality has embarked on a large water treatment plant project through its Utility Authority and the issue of sales tax keeps popping up. For my small community, the sales tax portion is a huge sum of money (several hundred thousands of dollars) and the city obviously wants to avoid payment of sales tax, if possible. The loan applications were submitted before my tenure as City Attorney and only include the Authority. My understanding is that we have three choices: 1. Pay sales tax. This seems the lowest risk option, but could cost the City significantly (and perhaps unnecessarily). 2. Purchase equipment and materials through the Authority. I have been told by some engineers that they have avoided sales tax by having the contractor order all the materials and equipment, have the invoices submitted to "Authority, c/o Contractor," and then attach the invoices to the Contractor's pay application such that the Authority may cut 5 checks instead of 1 check to the Contractor. OAC 710:65-13-551(a) states that in order to be exempt from sales tax, the purchase "must be invoiced to and paid for by the authority," That same section, though, also prohibits the Authority from appointing a purchasing agent. I'm worried that if the Contractor orders everything, that makes it a de facto purchasing agent. Here are some of my other concerns related to this option: * Who is liable when equipment/parts are inevitably delayed? * What happens if the Authority receives faulty equipment/parts? Who is responsible for working with the vendor to correct the problem? * What if equipment is delivered on Friday after the Contractor has left and a tornado (or other natural disaster) demolishes it over the weekend? Who is liable? * Would this void (or at least limit) the warranty by the Contractor? For example, if equipment malfunctions after six months, could the Contractor refuse to fix it because the Authority was the one who purchased it? I'm sure there are many more potential problems, but those are the one's I've identified thus far. 1. Add the City to the project. Unfortunately, we are dealing with two different federal funding agencies and I'm not sure this would be acceptable. Unfortunately, the project has already begun, so I am under a time constraint. I would greatly appreciate any pointers on how your municipalities have dealt with this issue! We are set to begin another large infrastructure project related to wastewater, so I'd also be interested in how you structure these projects on the front-end to avoid these issues. Many thanks, Krystina E. Phillips Indian & Environmental Law Group, PLLC 117 S. Ash Street Ada, OK 74820 krystina@iaelaw.com (580) 453-7051 (918) 948-6190 (fax) NOTICE: This email (including attachments) is confidential and may be legally privileged. If you are not the intended recipient, you are hereby notified that any retention, dissemination, distribution, or copying of this communication is strictly prohibited. Please reply to the sender if you have received the message in error, then delete it.