Tax Type
Retail Sales and Use Tax
Description
Government Contracts, precast concrete components
Topic
Exemptions
Date Issued
11-20-2002
November 20, 2002
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in response to your letter of April 10, 2002, requesting a refund of sales and use tax paid by ***** (the "Taxpayer") in the amount of *****. I apologize for the delay in the Department's response.
FACTS
The Taxpayer custom fabricates and installs precast concrete components for real property construction. In connection with a real property construction project in the District of Columbia, the Taxpayer paid sales and use tax on its purchases of construction materials withdrawn from its Virginia inventory and incorporated into realty by the Taxpayer. The materials were purchased within the period April 1999 through October 2000.
The project was with an agency of the federal government. Pursuant to District of Columbia Regulation § 438.8, the construction materials at issue are exempt from the District of Columbia sales and use tax.
DETERMINATION
Va. Code § 58.1-609.3(1) provides an exemption from the retail sales and use tax for:
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- 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.
Interpreting this exemption, Title 23 of the Virginia Administrative Code 10-210410(I) provides the following:
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- Construction contractors may purchase exempt from tax construction materials for temporary storage in Virginia to be used in exempt construction projects in other states or foreign countries. Contractors entitled to this exemption may obtain certificates of exemption upon written request to the Department of Taxation. The request should include information to show that the construction materials could be purchased by the contractor free from sales or use tax in the other state or foreign country.
This exemption is restricted to construction materials incorporated into exempt real property construction. The tax applies to equipment, tools, supplies, etc., used in performance of the construction contract. The tax applies to all other construction materials, temporarily stored in Virginia, that will be incorporated into real estate construction projects outside Virginia.
Based on the above, I find that the Taxpayer is entitled to the tax refund requested. I will ask the audit staff to expedite the processing of this refund.
The Code of Virginia and regulations cited are available online in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us.
If you have any questions about this determination, you may contact ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
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AR/39951R
Rulings of the Tax Commissioner