Tax Type
Individual Income Tax
Description
Contractor installing carpeting and performing landscaping
Topic
Taxability of Persons and Transactions
Date Issued
06-19-1985
June 19, 1985
Re: § 58.1-1821 Application/Sales and Use Tax
Dear ****
This will reply to your letter of January 11, 1985, on behalf of ***** (Taxpayer), seeking correction of a sales and use tax assessment issued by the department for the period November, 1978 through June, 1984.
FACTS
Taxpayer is involved in the business of real estate construction, and in connection with such construction, installs carpeting and performs landscaping, including grass seeding and sod planting. Taxpayer contends, that its purchase of carpeting and landscaping materials should be exempt from sales and use tax, pursuant to § 58.1-610 of the Virginia Code.
It should be noted that repeated attempts have been made to secure additional information concerning the exact nature of the transactions described above, but as of this date no such information has been received.
DETERMINATION
§ 58.1-610(A) of the Virginia Code states in pertinent part, that "any person who contracts...to perform construction, or any other service with respect to real estate or fixtures thereon, (and who furnishes tangible personal property in connection therewith), shall be deemed to have purchased such tangible personal property for use or consumption."
Therefore, "Any sale, distribution, or lease to or storage for such person shall be deemed a sale, etc...for the ultimate consumer and not for resale." Furthermore, whenever such sales tax has not been paid by the dealer supplying such tangible personal property, the construction contractor, "shall be deemed to be the consumer of the tangible personal property so used" and shall pay a use tax based on the fair market value of such property. Ibid.
§ 58.1-610(D) of the Code provides however that "Any person selling fences, venetian blinds, window shades, awnings, etc., floor coverings (as distinguished from the floors themselves),...shall be deemed to be a retailer of such items and not a using or consuming contractor with respect to them." § 630-10-27(G) of the Virginia Sales and Use Tax Regulations defines "retailer" as, any person who maintains a retail or wholesale place of business, an inventory of items and or materials which enter into or become a component part of (such) items, and who performs installation as part of or incidental to the sale of (such) items.
In the absence of any evidence presented to the contrary, it must be assumed that for purposes of the transactions in the present case, Taxpayer was not a retailer, but a using and consuming contractor with respect to the carpeting and landscaping supplies purchased. Therefore, Taxpayer is liable to the department for sales and use tax on such items
Based on all of the foregoing, I find no basis to adjust the assessment issued in this case, the full amount of which is now due and payable.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner