Tax Type
Retail Sales and Use Tax
Description
Short load/holding time ,extraordinary charges are assessed on concrete delivery site.
Topic
Appropriateness of Audit Methodology
Property Subject to Tax
Date Issued
05-13-1982
May 13, 1982
Re: 58-1118 Application/Sales and Use Tax
Dear *********************
This will reply to your letter of February 19, 1982 in which you petition for correction of sales and use taxes assessed against ************** as the result of a recent audit.
FACTS
******** is engaged in the manufacture and delivery of ready- mix concrete. In connection with the sale of this concrete, ******** occasionally assesses "short load" or "holding time" charges in addition to the price of concrete. These extraordinary charges are assessed at the delivery site.
The "short load" charge generally represents an additional charge to a customer who needs a smaller quantity of concrete than originally ordered, while "holding time" charges represent charges resulting from a customer's inability to receive the concrete at the time prescribed, requiring the concrete truck to wait at the site. No sales tax was collected on these charges during the audit period resulting in a deficiency assessment. ********** has begun collecting tax on these charges.
A portion of the audit deficiency represents use tax on items purchased for ********** use or consumption on which no tax was paid. It is our understanding that only that segment of the assessment representing sales tax on short load and holding time charges is in contest.
DETERMINATION
§58-441.6 of the Code of Virginia provides an exemption for machinery and tools and other items used directly in manufacturing tangible personal property for sale. The Department has determined that a concrete mixer unit affixed to a motor vehicle is machinery used directly in manufacturing. However, since the manufacture of concrete is in progress during the period of transit, no ready-mix concrete has been manufactured until the vehicle reaches its destination. Consequently, no portion of the delivery charge can be excluded as separately stated transportation since the delivery of ready-mix concrete constitutes the manufacture of the product. This position is set forth in §124.1 of the Virginia Retail Sales and Use Tax Regulations.
Further, Virginia Code §58-441.3(b) includes in the definition of "sales price" for purposes of computing the tax, "any services that are a part of the sale." Short load and holding charges are charges for a service in connection with the sale of the concrete, and therefore are includible in sales price and subject to the tax.
Based upon the foregoing, I find no basis for accepting your petition for correction of this assessment.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner