04-156 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Application of the retail sales and use tax to custom-made window shutters

Topic

Property Subject to Tax

Date Issued

09-30-2004

September 30, 2004

Re: Request for Ruling: Retail Sales and Use Tax

Dear *********:

This is in response to your letter in which you request guidance on the application of the retail sales and use tax to custom-made window shutters sold by ********* (the "Taxpayer"). I apologize for the delay in the Department's response.

FACTS

The Taxpayer makes wholesale and retail sales of building supplies, framing materials, and other merchandise through its stores. As part of its business, the Taxpayer contracts with customers to furnish and install custom-made interior (wood or resin) window shutters tailored to fit a particular opening. The Taxpayer, however, contracts out the actual fabrication and installation of these shutters. A lump-sum sales price for materials and labor is quoted by the independent fabricator/installer and then invoiced to the customer by the Taxpayer.

You indicate that each shutter is "attached by hinges to the shutter frame, and is custom made to fit the individual window and shutter frame." You also indicate that the shutter frame is "installed with finishing nails and glued or caulked into place in a similar manner as a doorframe." You maintain that the removal of the shutter would "result in substantial damage to the window frame."

The Taxpayer never takes physical possession of the inventory or materials involved in making the shutters. Rather, "the independent installer maintains [its] own stock of the materials" used to fabricate the shutters.

RULING

Virginia Code § 58.1-610 (D) on contractors sets out the following provisions:

- Tangible personal property incorporated in real property construction which loses its identity as tangible personal property shall be deemed to be tangible personal property used or consumed within the meaning of this section. Any person selling fences, venetian blinds, window shades, awnings, storm windows and doors ...or other like or comparable items, shall be deemed to be a retailer of such items and not a using or consuming contractor with respect to them, whether he sells to and installs such items for contractors or other customers and whether or not such retailer fabricates such items. [Emphasis added.]

This statute specifically applies to "venetian blinds" and "window shades" as well as to "other like or comparable items." Because the statute does not define those terms, we must look to the common definitions. The term "venetian blind" is defined by Webster's ll New College Dictionary (1995) as "[a] window blind made of thin horizontal slats that may be raised and lowered and set at ,a desired angle to control the amount of light admitted." Webster's also defines the term "window shade" as "an opaque fabric mounted to cover or expose a window." Black's Law Dictionary (1990) defines the term "like" as "[e]qual in quantity, quality, or degree or exactly corresponding" and "[a]Iso means having the same, or nearly the same, appearance, qualities, or characteristics."

The interior window shutters at issue consist of thin horizontal slats that can be set at a desired angle to control the light admitted but cannot be raised or lowered. These shutters also are not made of an opaque fabric. For these reasons, the interior window shutters are not like or comparable to venetian blinds or window shades. Accordingly, the provisions of Va. Code § 58.1-610 (D) do not apply.

Instead, the provisions of Va. Code § 58.1-610(A) are applicable. These interior shutters are attached to the realty, annexed to the realty in a manner that is suitable to the realty's use, and intended to remain permanently in place. Accordingly, once installed, they would constitute an improvement to realty for sales and use tax purposes. As such, any person who furnishes and installs them would be deemed a real property installation contractor pursuant to Va. Code § 58.1-610(A) and liable for the sales and use tax on all of its purchases of materials used in fabricating these shutters. Such contractor, however, must not pass on the tax as a tax to its customer. Rather, the tax must be taken into consideration (like other costs) when making the quote or bid for the job. See Title 23 of the Virginia Administrative Code 10-210-410.

Thus, when invoicing a lump-sum charge for the sale and installation of the interior window shutters at issue, the Taxpayer should not charge any sales tax to its customers in connection with these billings.

The Code of Virginia sections and regulations cited are available on-line 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 ruling, you may contact ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.

- - - - Sincerely,

- - - - Kenneth W. Thorson
        Tax Commissioner

AR/49221R

Rulings of the Tax Commissioner