Tax Type
Retail Sales and Use Tax
Description
Contractor purchases
Topic
Taxability of Persons and Transactions
Date Issued
08-08-1984
August 8, 1984
Re: §58-1118 Application: Sales and Use Tax
Dear ********
This will reply to your letter of July 15, 1983, in which you seek relief of sales and use tax assessed against your company, as the result of a recent audit. This final determination is being issued because the department has received no response to inquiries for additional information necessary to your company's position.
FACTS
Your company, a general contractor, underwent a sales and use tax audit for the period **** through **** for which an assessment was issued for $***** in tax and $**** in interest, with respect to items purchased by your company for its own use and consumption.
Your company contests the entire audit on the grounds that the untaxed purchases represent items not subject to the tax or items on which tax has already been paid by your company or by subcontractors.
DETERMINATION
§ 58-441.15 of the Code of Virginia provides that any person who contracts to perform construction with respect to real estate and in connection therewith to furnish tangible personal property shall be deemed to have purchased such tangible personal property for use or consumption. Va. Code § 58-441.5 imposes a tax on such use or consumption when sales tax has not been paid to the seller. As general contractor and purchaser of tangible personal property used in a facility located in Virginia, you are liable either for payment of the sales tax to your supplier at the time the property is purchased or for remittance of the use tax on the property directly to the Department of Taxation.
Similarly, any subcontractor who contracted to furnish tangible personal property for construction with respect to real estate is deemed to be the user or consumer of such property and is liable for sales tax at time of purchase or use tax at the time of use.
However, you have presented no evidence that any contested items in the audit were, in fact, subcontracts and as such exempt from tax. In addition, your company has neither substantiated its claim of prior tax payments nor has it identified which items are not subject to the tax and the reason therefore.
Based on the foregoing, I find no basis for relief and the amount assessed is due and payable.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner