Tax Type
Retail Sales and Use Tax
Description
Saw sharpening
Topic
Taxability of Persons and Transactions
Date Issued
05-11-1987
May 11, 1987
Re: Ruling Requests Sales and Use Tax
Dear ***********************
This will reply to your letter of February 26. 1987 seeking information on the correct application of the tax to transactions engaged in by ************* (taxpayer).
FACTS
The taxpayer seeks a ruling on whether the charge by a saw company for the sharpening of saws used by the taxpayer in connection with its interior door business is subject to the tax or whether such charge represents the charge for a nontaxable service.
In addition, the taxpayer seeks information on the correct application of the tax to its purchases of parts for tools used in assembling door units.
RULING
Virginia Code §58.1-608(2) provides that the sales and use tax does not apply to, "personal service transactions which involve sales as inconsequential elements for which no separate charges are made, nor [to] services rendered by repairmen for which a separate charge is made." Section 630-10-37 of the Virginia Retail Sales and Use Tax Regulations defines a repair transaction as "an operation that restores a used or worn piece of tangible personal property."
Inasmuch as the transaction described in the present case involves the restoration of a used or worn piece of tangible personal property to its original condition, and does not involve the sale or transfer of a significant amount of tangible personal property, the total charge for such saw sharpening qualifies for exemption from the tax under the above cited Code section.
However. when a saw company also provides replacement parts, materials and supplies in connection with its saw repairs. it must collect and report the tax on the total charge for such repairs, (unless given a certificate of exemption by its customer) including repair labor, to the extent such repair labor charges are not separately stated. (See 630-10-90 of the regulations, copy enclosed).
In addition, Virginia Code §58.1-608 (1) provides an exemption from the sales and use tax for "machinery or tools or repair parts therefor or replacements thereof... used directly in processing [or] manufacturing... of products for sale or resale." Emphasis added). Based upon the limited information provided your business may qualify for this exemption. If you do qualify. you may purchase parts for tools used directly in your door manufacturing operation provided you also present a properly completed certificate of exemption Form ST-11. (copy enclosed) to your parts vendors at the time of making such purchases.
I hope all of the foregoing has responded to your questions but let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner