Tax Type
Retail Sales and Use Tax
Description
Contractor's Exemption: Materials Stored in Virginia
Topic
Exemptions
Property Subject to Tax
Date Issued
06-15-2001
June 15, 2001
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This is in response to your letter of April 10, 2001, requesting a ruling on the application of the retail sales and use tax to concrete cylinder piles, beams and other bridge components purchased by ***** (the "Taxpayer").
FACTS
The Taxpayer consists of two independent construction companies that have entered into a joint venture in New Jersey to upgrade a roadway and replace a bridge. You indicate the bridge is owned by the New Jersey Department of Transportation. The Taxpayer has purchased the above-noted bridge components from a Virginia vendor for use in this project. The Taxpayer maintains that these items may be purchased exempt of the New Jersey sales and use tax pursuant to the New Jersey Sales and Use Tax Act ("N.J.S.A.") 54:32B-8.22 and New Jersey Administrative Code ("N.J.A.C.") 18:24-5.3 and, therefore, should qualify for exemption from the Virginia retail sales and use tax pursuant to Code of Virginia § 58.1-609.3(1).
DETERMINATION
Code of Virginia § 58.1-609.3(1) provides an exemption from the Virginia retail sales and use tax for:
-
- 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.
This provision exempts from tax a contractor's purchases of construction materials which are temporarily stored in Virginia pending shipment outside of Virginia for incorporation into an exempt real property construction project. The exemption is restricted to construction materials that are to be incorporated into real property construction and could be purchased tax free by the contractor in the other state or nation. The tax applies, however, to property that is not incorporated into realty, such as equipment, tools, supplies, etc., used in the performance of the construction project. See Title 23 of the Virginia Administrative Code 10-210-410(I), copy enclosed.
Under current New Jersey law (N.J.S.A. 54:32B-8.22 and N.J.A.C. 18:24-5.3), materials and supplies for exclusive use in the fulfillment of a contract to improve or repair the real property of an exempt organization as described in N.J.S.A. 54:32B-9(a) and 9(b) are exempt from the sales and use tax. Pursuant to N.J.S.A. 54:32B-9(a), the State of New Jersey and its agencies are deemed to be exempt organizations.
Since the Taxpayer could purchase the construction materials tax free in New Jersey, the Taxpayer will be exempt from the Virginia retail sales and use tax on bridge construction materials purchased in Virginia for incorporation into the exempt real property construction project in New Jersey. However, equipment, tools, supplies, etc., which are not exclusively consumed in the performance of this contract are taxable.
To make a tax-free purchase of construction materials for use in this project, Virginia Form ST-11A (copies enclosed) must be completed and presented to vendors for purchases of construction materials made for this project only.
If you have any questions about this response, please contact ***** of the Department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/33947R
P. D. 01-80
COMMONWEALTH of VIRGINIA
Department of Taxation
Department of Taxation
TO WHOM IT MAY CONCERN
Under the authority of Section 58.1-1 of the Code of Virginia, I hereby delegate to Janie E. Bowen, Assistant Tax Commissioner, the authority to sign for me any and all documents, including, but not limited to, affidavits, warrants, rulings, appeals, offers in compromise and sales tax revocations.
This authority shall not extend to matters or documents related to my service on any statutorily created board or commission, including, but not limited to, the Compensation Board and the Treasury Board.
This authority will continue until revoked. The delegation of authority dated June 3, 1994, is hereby revoked and replaced.
Done at Richmond, Virginia this tenth day of September, 1999.
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner