Tax Type
Retail Sales and Use Tax
Description
Glazing Contractor; Tax owed on damaged or unusable glass,
Topic
Taxability of Persons and Transactions
Date Issued
03-07-2000
March 7, 2000
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you request a ruling on the application of the retail sales and use tax to certain purchases made by * * * (the "Taxpayer"). I apologize for the delay in responding to you.
FACTS
The Taxpayer is a glazing contractor that performs real property contract work for general contractors. Occasionally, the Taxpayer measures a piece of glass incorrectly or breaks a piece of glass that is to be used on a job. The Taxpayer must then purchase a piece of replacement glass and pay sales tax on the purchase. Since the Taxpayer has previously paid sales tax on the damaged or unusable glass, it wishes to know if the replacement glass can be purchased exempt from the sales and use tax.
RULING
Code of Virginia § 58.1-603 imposes a sales tax on the gross sales price of each item or article of tangible personal property sold at retail in Virginia. Code of Virginia § 58.1-602, copy enclosed, defines "Retail sale" as "a sale to any person for any purpose other than for resale in the form of tangible personal property or services taxable under this chapter . . ." Retail sales of tangible personal property to the Taxpayer are subject to sales and use tax unless the sale is for resale as required in the statutory definition of "retail sale."
Generally, real property contractors are considered the taxable consumers or users of all purchases of tangible personal property purchased for use in real property construction (see Code of Virginia § 58.1-610, copy enclosed). The Taxpayer is considered the taxable consumer or user of each piece of glass at the time the glass is purchased for a job. Although a piece of glass may be damaged and become unusable for a job, the Taxpayer's purchase of the glass is taxable as a retail sale at the time of purchase. When the Taxpayer subsequently purchases a replacement piece of glass, another retail sale occurs in a transaction separate from the sale of the first piece of glass. Absent a statutory exemption, the Taxpayer cannot purchase replacement glass exempt of the tax.
The Taxpayer's situation is distinguishable from the example given of a grocery store that is not liable for sales tax when grocery items become spoiled and are thrown away. The damaged goods in this case have been purchased exempt of sales and use tax under the resale exemption. The grocer does not make "use" of the inventory prior to spoilage. Unlike the grocery store, the Taxpayer is a contractor and makes use of its purchases when title or possession is taken to the items purchased.
I trust the foregoing has addressed the Taxpayer's concerns. If you have any questions concerning this ruling, please contact * * * at * * *
Sincerely,
Danny M. Payne
Tax Commissioner
Tax Commissioner
Rulings of the Tax Commissioner