Tax Type
Retail Sales and Use Tax
Description
Custom kitchen cabinet sales and installation
Topic
Taxability of Persons and Transactions
Date Issued
06-05-1985
June 6, 1985
RE: § 58.1-1821 Application/Sales and Use Tax
Dear ****
This will reply to your letter of April 15, 1985, in which you appeal an assessment of sales and use taxes for the period November 1, 1981, through July 31, 1984.
Facts
***** (Taxpayer) is a builder and installer of custom kitchen cabinets. Pursuant to a 1979 audit, taxpayer was instructed to pay tax on the cost price of those cabinets which he installed, and to remit the tax on the sale price only when the cabinets were sold without installation. Despite a subsequent change in the law in 1980, which directed that all sellers and installers of such items be considered retailers and collect the sales tax at the point of sale or installation, taxpayer continued to pay the tax as instructed in the 1979 audit.
The assessment in the case is, therefore, based on application of the tax to the difference between the cost price to taxpayer and the sales price at which taxpayer sold and installed his cabinetry.
Taxpayer contests the audit assessment on the ground that inasmuch as he was not a member of any trade organization or association, he was not aware of the change in the law. It is the department's understanding, however, that taxpayer is registered under business code #51 and that a Tax Policy Statement covering the law change was distributed to dealers within that classification code.
Determination
§ 58.1-610(D) of the Virginia Code provides generally that "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 (by the contractor)." However, "Any person selling fences,....cabinets, kitchen equipment... etc...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.
Although the latter portion of the code section just cited represents law enacted in 1980, Taxpayer was put on actual or constructive notice of such change in the law, according to the department's Tax Policy Statement publication and distribution records. Furthermore, such advice which taxpayer received in the 1979 audit was accurate when given, but remained subject to change (as does all advice given by the department) by legislative action of the General Assembly.
Therefore, based on all of the facts presented in this case, I find no basis for correction of the assessment. However, § 58.1-105 of the Code provides that the Tax Commissioner may consider offers made to compromise or settle doubtful or disputed claims for taxes or tax liability of doubtful collectibility.
Therefore, if taxpayer can set forth specific grounds for partial abatement of the assessment in this case, based on either doubtful liability or doubtful collectibility, consideration may be given to adjusting the audit assessment. Such offer should be submitted to the Tax Commissioner at the following address: Department of Taxation, P.0. Box 6-L, Richmond, Virginia 23282.
Sincerely,
W. H Forst
Tax Commissioner
RE: § 58.1-1821 Application/Sales and Use Tax
Dear ****
This will reply to your letter of April 15, 1985, in which you appeal an assessment of sales and use taxes for the period November 1, 1981, through July 31, 1984.
Facts
***** (Taxpayer) is a builder and installer of custom kitchen cabinets. Pursuant to a 1979 audit, taxpayer was instructed to pay tax on the cost price of those cabinets which he installed, and to remit the tax on the sale price only when the cabinets were sold without installation. Despite a subsequent change in the law in 1980, which directed that all sellers and installers of such items be considered retailers and collect the sales tax at the point of sale or installation, taxpayer continued to pay the tax as instructed in the 1979 audit.
The assessment in the case is, therefore, based on application of the tax to the difference between the cost price to taxpayer and the sales price at which taxpayer sold and installed his cabinetry.
Taxpayer contests the audit assessment on the ground that inasmuch as he was not a member of any trade organization or association, he was not aware of the change in the law. It is the department's understanding, however, that taxpayer is registered under business code #51 and that a Tax Policy Statement covering the law change was distributed to dealers within that classification code.
Determination
§ 58.1-610(D) of the Virginia Code provides generally that "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 (by the contractor)." However, "Any person selling fences,....cabinets, kitchen equipment... etc...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.
Although the latter portion of the code section just cited represents law enacted in 1980, Taxpayer was put on actual or constructive notice of such change in the law, according to the department's Tax Policy Statement publication and distribution records. Furthermore, such advice which taxpayer received in the 1979 audit was accurate when given, but remained subject to change (as does all advice given by the department) by legislative action of the General Assembly.
Therefore, based on all of the facts presented in this case, I find no basis for correction of the assessment. However, § 58.1-105 of the Code provides that the Tax Commissioner may consider offers made to compromise or settle doubtful or disputed claims for taxes or tax liability of doubtful collectibility.
Therefore, if taxpayer can set forth specific grounds for partial abatement of the assessment in this case, based on either doubtful liability or doubtful collectibility, consideration may be given to adjusting the audit assessment. Such offer should be submitted to the Tax Commissioner at the following address: Department of Taxation, P.0. Box 6-L, Richmond, Virginia 23282.
Sincerely,
W. H Forst
Tax Commissioner
Rulings of the Tax Commissioner