Remodeling Services From Big Box Stores Trigger Tax Trouble (1)

Home improvement retail chains are receiving heightened scrutiny from state revenue agencies for unpaid taxes in transactions where the big box stores act more like construction contractors than traditional retailers.

Best Buy, Home Depot, and Lowe’s could be on the hook for millions in unpaid sales tax liabilities and penalties under two lawsuits advancing in Illinois. And South Carolina’s Department of Revenue is pursuing $2.8 million in back taxes, penalties and interest against Lowe’s after winning a $2 million judgment against Home Depot.

The tax question involves whether home improvement stores should be viewed as retailers or contractors ...