Tax Type
Retail Sales and Use Tax
Description
Automobile dealership purchase of flagpole and work bench
Topic
Taxability of Persons and Transactions
Date Issued
09-07-1984
September 7, 1984
Re: § 58-1118 Application/Use Tax
Dear *******
This is in response to your letter of June 12, 1984, applying, on behalf of ***** for correction of erroneous assessment of use tax.
FACTS
The taxpayer, an automobile dealership, was audited for the period of May 1, 1981, through March 31, 1984, and a portion of the deficiency resulted from failure to collect use tax on a flagpole and a bench repair system purchased from out-of-state vendors. The taxpayer contests the assessment to tax on these items on the grounds that they are attachments to the realty and thus not subject to tax. The flagpole is sunk into concrete and stands outside the dealership. The bench repair system is a part of the machinery in the repair shop.
DETERMINATION
Code of Virginia § 58-441.5 imposes "a tax upon the use or consumption of tangible personal property in this State ...." § 58-441.3(1) defines "tangible personal property" as "personal property, which may be seen, weighed, measured, felt, or touched, or is in any other manner perceptible to the senses." There is no exemption from sales or use tax under Virginia law for the purchase or use of tangible personal property that is later incorporated into realty or later made a fixture upon realty.
Furthermore, the law provides no exemption for machinery used in repair businesses Retail Sales and Use Tax Regulation § 1-90(b) provides that "tax must be paid on equipment, tools, and all other tangible personal property used in performing the repair work."
Accordingly, since there is no statutory exemption far the tangible personal property that later becomes realty or fixtures thereon, our assessment of tax upon the use in this state of the flagpole and bench repair system is not erroneous, and your application for correction must be denied.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner