Tax Type
Retail Sales and Use Tax
Description
Landscape subcontractors; Use tax liability
Topic
Taxability of Persons and Transactions
Date Issued
05-10-1988
May 10, 1988
Re: §58.1-1821 Application/Sales and Use Tax
Dear****************
This will reply to your letter of November 23, 1987 in which you seek the correction of sales and use tax assessed to ************** ("taxpayer") as the result of an audit for the period January 1, 1984 to September 30, 1986.
FACTS
The taxpayer is a general contractor located in Maryland and operating in several states including Virginia. The taxpayer was assessed use tax for its failure to pay sales tax for landscaping work performed by subcontractors in connection with two Virginia projects. The taxpayer contends the contract with the landscape subcontractors provides that the subcontractor will be responsible for all sales, use or other taxes, including interest and penalties, arising out of the subcontract. The taxpayer contends further that the Virginia Code considers the landscaper to be a retailer and thus the party ultimately responsible for remitting sales tax to the State of Virginia. Therefore, the State should seek payment of any sales tax from the subcontractors rather than the taxpayer.
DETERMINATION
The department has traditionally held that nurserymen, florists, landscape contractors and other persons who sell and transplant trees, plants, shrubbery and other landscaping materials to be retailers. As provided in Virginia Regulation 630-10-40:
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- When a nurseryman, florist or other person makes retail sales of shrubbery and similar items, and as a 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.
- When a nurseryman, florist or other person makes retail sales of shrubbery and similar items, and as a 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.
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- Although the seller is legally obligated to collect the tax from the purchaser, the statute [Virginia Code §58.1-625] makes the tax the legal debt of the purchaser. "...[W]here a state requires that its sales tax be passed on to the purchaser and be collected by the vendor from him, this establishes as a matter of law that the legal incidence of the tax falls upon the purchaser." United States v. State Tax Commissioner of Mississippi, 421 U.S. 599, 607, 95 S.Ct. 1872, 1878, 44 L.Ed.2d 404 (1975).
- Although the seller is legally obligated to collect the tax from the purchaser, the statute [Virginia Code §58.1-625] makes the tax the legal debt of the purchaser. "...[W]here a state requires that its sales tax be passed on to the purchaser and be collected by the vendor from him, this establishes as a matter of law that the legal incidence of the tax falls upon the purchaser." United States v. State Tax Commissioner of Mississippi, 421 U.S. 599, 607, 95 S.Ct. 1872, 1878, 44 L.Ed.2d 404 (1975).
Based upon the foregoing, I find no basis for a correction of the assessment, which is now due and payable in full. If you have any further questions regarding this matter, please do not hesitate to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner