I am in the air conditioning and heating business. We sell, service and install heating and cooling systems. We pay the sales tax on our purchases of these systems. We have a contract to install a cooling system to a state agency. Do we owe the use tax on the purchases that go into this job?

If the Louisiana state or municipal government agency did not provide you with the R-1020 with their contract then, yes, you will owe the sales/use tax on the purchases. The fact that these purchases are for a state agency does not exempt you, as a contractor, from the use tax due on these purchases. Before bidding on a Louisiana state or municipal government contract, find out if that agency will be providing the contractor with the R-1020 Designation of Contractor that will allow you to purchase qualifying items tax exempt. Make sure you have that contract before purchasing as the selling vendor will be required to obtain and retain a copy in their records for audit purposes. Qualifying items consist of materials that will become property of the government agency upon completion of the project. Non-qualifying items consist of tools and other consumables used by your company to complete the non-taxable immovable property contract.