Tax Type
Retail Sales and Use Tax
Description
Asphalt manufacturer/contractor; Use in another state; Reciprocity
Topic
Taxability of Persons and Transactions
Date Issued
08-22-2000
August 22, 2000
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This is in reply to your letter in which you seek correction of the retail sales and use tax audit assessment issued to your client, ***** (the "Taxpayer"), for the period January 1996 through January 1998. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer is a Virginia asphalt manufacturer/contractor. The Taxpayer is a using and consuming contractor for the majority of the asphalt produced. The department's audit resulted in the assessment of tax on asphalt manufactured in Virginia and transported outside Virginia to be incorporated into real property construction contracts in West Virginia. The Taxpayer paid no Virginia tax on the asphalt incorporated in West Virginia jobs, but instead paid tax to West Virginia at the time of installation. The Taxpayer is of the opinion that it properly paid the West Virginia tax, and the Virginia tax was improperly assessed. The Taxpayer is requesting correction of the Virginia audit assessment.
DETERMINATION
Code of Virginia § 58.1-610, copy enclosed, addresses real property construction contractors and provides that construction contractors are the taxable users of all tangible personal property purchased, used or stored in Virginia in connection with real property construction contracts. This includes all tangible personal property manufactured in Virginia for use in real property construction contracts performed either inside or outside of Virginia.
An exception to this general rule is set forth in the retail sales and use tax exemption under Code of Virginia § 609.3(1), as follows:
Personal property purchased by a contractor which is used solely in another state or in a foreign country, which could be purchased by such contractor for such use free from sales tax in such other state or foreign country, and which is stored temporarily in Virginia pending shipment to such state or country.
In the present situation, the Taxpayer manufactured asphalt in Virginia for use and consumption on a taxable real property construction job in West Virginia. While I realize the Taxpayer has paid the use tax to West Virginia on these jobs, under the Virginia statutes cited above, the materials manufactured in Virginia are clearly subject to the Virginia retail sales and use tax. Had the Taxpayer been able to purchase the asphalt in West Virginia tax exempt, the exemption from the Virginia sales tax set forth above would have been applicable. For this reason, I find no basis for revising the audit.
The Commonwealth of Virginia has reciprocity relationships with bordering states, including West Virginia, concerning retail sales and use taxes. In similar situations, West Virginia has been willing to refund erroneously paid use taxes. I suggest that the Taxpayer contact the West Virginia Department of Tax and Revenue to resolve this matter by requesting a refund of taxes paid to West Virginia on the materials at issue.
If you should have any questions regarding this response, please contact *****, Office of Tax Policy, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21845K
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This is in reply to your letter in which you seek correction of the retail sales and use tax audit assessment issued to your client, ***** (the "Taxpayer"), for the period January 1996 through January 1998. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer is a Virginia asphalt manufacturer/contractor. The Taxpayer is a using and consuming contractor for the majority of the asphalt produced. The department's audit resulted in the assessment of tax on asphalt manufactured in Virginia and transported outside Virginia to be incorporated into real property construction contracts in West Virginia. The Taxpayer paid no Virginia tax on the asphalt incorporated in West Virginia jobs, but instead paid tax to West Virginia at the time of installation. The Taxpayer is of the opinion that it properly paid the West Virginia tax, and the Virginia tax was improperly assessed. The Taxpayer is requesting correction of the Virginia audit assessment.
DETERMINATION
Code of Virginia § 58.1-610, copy enclosed, addresses real property construction contractors and provides that construction contractors are the taxable users of all tangible personal property purchased, used or stored in Virginia in connection with real property construction contracts. This includes all tangible personal property manufactured in Virginia for use in real property construction contracts performed either inside or outside of Virginia.
An exception to this general rule is set forth in the retail sales and use tax exemption under Code of Virginia § 609.3(1), as follows:
Personal property purchased by a contractor which is used solely in another state or in a foreign country, which could be purchased by such contractor for such use free from sales tax in such other state or foreign country, and which is stored temporarily in Virginia pending shipment to such state or country.
In the present situation, the Taxpayer manufactured asphalt in Virginia for use and consumption on a taxable real property construction job in West Virginia. While I realize the Taxpayer has paid the use tax to West Virginia on these jobs, under the Virginia statutes cited above, the materials manufactured in Virginia are clearly subject to the Virginia retail sales and use tax. Had the Taxpayer been able to purchase the asphalt in West Virginia tax exempt, the exemption from the Virginia sales tax set forth above would have been applicable. For this reason, I find no basis for revising the audit.
The Commonwealth of Virginia has reciprocity relationships with bordering states, including West Virginia, concerning retail sales and use taxes. In similar situations, West Virginia has been willing to refund erroneously paid use taxes. I suggest that the Taxpayer contact the West Virginia Department of Tax and Revenue to resolve this matter by requesting a refund of taxes paid to West Virginia on the materials at issue.
If you should have any questions regarding this response, please contact *****, Office of Tax Policy, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21845K
Rulings of the Tax Commissioner