Tax Type
Retail Sales and Use Tax
Description
Manufacturing equipment; Purchases by contractors
Topic
Exemptions
Date Issued
09-21-1987
September 21, 1987
Re: Request for Ruling/Sales and Use Tax
Dear *****************
This will reply to the May 29, 1987 letter of ************* in which a ruling is requested on the purchase of manufacturing equipment r supplies, and raw materials by contractors to be furnished to or installed in your company's Virginia brewery.
To the extent that the equipment, supplies, and raw materials in question will be used directly in industrial manufacturing or processing (so as to be exempt from the sales and use tax under §58.1-608.1 of the Code of Virginia and Virginia Regulation 630-10-63), they may be purchased exempt from the tax by your contractors. The contractors should furnish each vendor from whom the equipment, supplies, or raw materials are purchased with an exemption certificate, Form ST-11A (copy enclosed). In turn, your company may purchase the items from the contractors exclusive of the tax when the contractors are furnished with a copy of your company's direct payment permit or a manufacturing exemption certificate, Form ST-11.
In order to obtain copies of Form ST-11A, your contractors should contact the department's Technical Services Section at P.O. Box 6-L, Richmond, Virginia 23282. When requesting the certificates, a contractor should provide the name of your company, the address of the project, and the completion date of the project. In addition, the contractor should provide a description of the work that it will perform.
Contractors may also purchase under a resale exemption certificate, Form ST-10, any tangible personal property that will
not be not be used directly in exempt production activities, provided that the property does not become affixed to real estate. In such an event, your company would pay the Virginia sales tax to the contractor or accrue the Virginia use tax under its direct payment permit.
It should be noted, however, that contractors may not make tax exempt purchases of structural construction materials or other items that will become affixed to real estate. In such an event, the contractors are deemed to be the taxable users or consumers of the property under §58.1-610 of the Code of Virginia and Virginia Regulation 630-10-27.
I trust that, this will 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