Tax Type
Retail Sales and Use Tax
Description
As a service provider, the Taxpayer is generally liable for retail sales and use tax
Topic
Credits
Taxable Transactions
Date Issued
05-07-2010
May 7, 2010
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This is in response to your letter requesting a ruling on the application of the sales and use tax to a service provided by ***** (the "Taxpayer") to Virginia customers. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer is headquartered outside of Virginia and offers construction dust and debris protection to building owners and roofing contractors. The Taxpayer temporarily installs plastic below the ceilings in commercial buildings to prevent debris from falling into work areas during a re-roofing construction project performed by another company. Upon completion of the project, the Taxpayer's crew removes the plastic and the accumulated construction dust and debris on and above the plastic. The Taxpayer asserts that it pays the sales and use tax on all materials purchased.
RULING
Virginia Code § 58.1-609.5 1 provides an exemption for "[p]rofessional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made . . . ." Title 23 of the Virginia Administrative Code (VAC) 10-210-4040 D also provides the following:
-
- In order to determine whether a particular transaction which involves both the rendering of a service and the provision of tangible personal property constitutes an exempt service or a taxable retail sale, the "true object" of the transaction must be examined. If the object of the transaction is to secure a service and the tangible personal property which is transferred to the customer is not critical to the transaction, then the transaction may constitute an exempt service. However, if the object of the transaction is to secure the property which it produces, then the entire charge, including the charge for any services provided, is taxable.
In this case, the true object of the transaction is to secure the service of construction dust and debris protection and removal. Any tangible personal property (the plastic) transferred to customers is an incidental component of the transaction. Based on the above, the charge for the debris collection and removal service is exempt from sales and use tax.
As a service provider, the Taxpayer is generally liable for the Virginia retail sales and use tax on all materials, tools and equipment used in performing such services. See Title 23 VAC 10-210-4040 E. When purchasing from the Taxpayer's out-of-state location, a credit for sales tax paid to another state is available for tangible personal property used or consumed in Virginia provided the Taxpayer takes initial possession of the purchased property outside of Virginia and such other state's sales or use tax is properly applicable and paid. For more information on such out-of-state tax credits, see Title 23 VAC 10-210-450. On the other hand, materials purchased outside Virginia and delivered directly by the vendor to a Virginia job site, a Taxpayer's agent or employee in Virginia, or a Taxpayer's place of business in Virginia are considered first used in Virginia and thus fully taxable in Virginia. In such instances, no out-of-state tax credit is available.
This response is based on the facts provided as summarized above. Any change in the facts or the introduction of new facts may lead to a different result.
The Code of Virginia section and regulations cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this ruling, you may contact ***** in the Department's Office of Tax Policy, ,Appeals and Rulings, at *****.
-
-
-
-
-
-
-
- Sincerely,
-
-
-
-
-
-
-
-
-
-
-
-
-
- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
-
-
-
-
-
-
AR/1-3326583885.R
Rulings of the Tax Commissioner