Tax Type
Retail Sales and Use Tax
Description
Landscaping contractor
Topic
Collection of Tax
Date Issued
10-31-1985
October 31, 1985
Re: §58.1-1821 Application/Sales and Use Tax
Dear ****
This will reply to your letter of July 19, 1985, in which you submit an application for correction of sales and use tax assessed to **** as the result of a recent audit.
FACTS
***** ("Taxpayer") is engaged in the sale and transplanting of trees, shrubs , sod, and other landscaping materials for building developers and other real estate contractors. A recent audit of the taxpayer produced an assessment for its failure to collect the sales tax on its sales of landscaping materials.
The taxpayer contests this assessment, asserting that it is engaged as a contractor, rather than a retailer. with respect to landscaping materials. The business is operated out of the owner's home and neither makes retail sales to the public nor maintains an inventory of products for sale,
DETERMINATION
The department has traditionally deemed nurserymen, landscape contractors, and others who sell and transplant trees, shrubs, sod, and other landscaping materials to be retailers. Consistent with this longstanding policy, Section 63O-10-40 of the Virginia Retail Sales and Use Tax Regulations provides:
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- When a nurseryman, florist or other person makes retail sales of shrubbery and similar items, and as part of the transaction agrees to transplant them on the land of the purchaser for a lump sum, the tax applies to the total charge. The tax does not apply to the charge for transplanting if the charge is separately stated on the invoice.
It is instructive, I feel, to note here that the comprehensive definition of "contractor" found in Section 58.1-3714 of the Code of Virginia does not include nurserymen, landscapers, and similar professions generally. Under that statutory definition, only landscapers who "contract to excavate earth, rock, or other material for foundation or any other purpose" are deemed to be engaged as contractors. As the taxpayer in this case merely procures and transplants trees, shrubs, sod, and other materials, it would not be considered a contractor under the above referenced statute.
Therefore, based upon the foregoing, the assessment of tax upon charges made to contractors for the sale of landscaping materials is proper. However, any Virginia sales tax paid by the taxpayer upon its purchase of landscaping materials that were later resold will be credited against the outstanding assessment Copies of purchase invoices showing tax paid upon items later resold should be provided to the department's Technical Services Section at P. O. Box 6-L, Richmond, Virginia 23282 within the next sixty days so that they may be credited against the assessment. In the future, landscaping materials may be purchased by the taxpayer exclusive of the tax when suppliers are furnished with resale exemption certificates.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner