Tax Type
Retail Sales and Use Tax
Description
Gasoline station canopies
Topic
Taxability of Persons and Transactions
Date Issued
04-21-1987
April 21, 1987
Re: Request for Ruling/Sales and Use Tax
Dear *****************
This will reply to your letter of March 25, 1987, in which you request a ruling on the application of the sales and use tax to canopies produced by your corporation for sale to Virginia customers.
FACTS
Your corporation is engaged in the production of canopies. The canopies typically are used by gasoline stations to provide shelter for customers using gasoline pumps. In addition, the shelters serve as a marketing device as they ordinarily contain the name of the business, the make of gasolines sold, etc. Due to the marketing value of the canopies, they are frequently replaced by customers within five to eight years due to image or marketing changes.
Each canopy is produced disassembled and customers have the option of erecting the canopy themselves or having it erected by your corporation. When the customer chooses to have your corporation erect a canopy, it must first provide footings and anchor bolts to which your corporation's installation crews may affix the canopy.
You request a ruling as whether your corporation is a retailer or a contractor respecting real estate when it erects canopies for Virginia customers.
RULING
§58.1-610 of the Code of Virginia provides that "[a]ny person who contracts...to perform construction, reconstruction, installation, repair, or any other service with respect to real estate or fixtures thereon, and in connection therewith to furnish tangible personal property, shall be deemed to have purchased such tangible personal property for use or consumption." Further, the statute states that "[a]ny sale...to...such person shall be deemed a sale...to...the ultimate consumer and not for resale." Thus, a contractor respecting real estate is deemed to be the taxable user or consumer of all materials furnished under a contract to erect or install property that will become affixed to realty and does not collect the sales tax from his customers when performing such contracts.
As the canopies installed by your firm become affixed to real estate and are assessed as real estate (rather than tangible personal property) for purposes of local taxation in Virginia, I must conclude that your corporation acts as a contractor respecting real estate when it installs canopies for Virginia customers. Thus, your corporation will not need to collect the sales tax from such customers. Rather, your corporation will be subject to the tax on any materials, equipment, etc. used in the state, with a nonrefundable credit for any tax paid on the materials, equipment, etc. in the state in which they were purchased. For your information, I have enclosed a copy of Virginia Regulation 630-10-27, which sets forth the application of the sales and use tax to contractors. In addition, I have enclosed a copy of Virginia Regulation 630-10-29, which explains the credit for taxes paid to other states.
Although your corporation will be deemed a contractor with respect to canopies that it erects for Virginia customers, it will continue to be a retailer with respect to canopies that are sold without installation. As such, you will be required to collect the tax on the sales price of each canopy sold to a Virginia customer for his own installation or to a Virginia contractor for installation for a customer.
I trust that this will fully answer your questions; however, please do not hesitate to contact the department if further questions arise.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner