Tax Type
Retail Sales and Use Tax
Description
Tax liability of contractors, subcontractors and general contractors
Topic
Taxability of Persons and Transactions
Date Issued
10-26-1989
October 26, 1989
Re: Request for Ruling: Sales and Use Tax
Dear*************
This is in reply to your letter of March 16, 1989 in which you are seeking a ruling as to the sales and use tax application to********** (taxpayer), a division of
FACTS
The taxpayer is in the business of selling interior window treatment products to contractors, dealers, property managers and government entities. The taxpayer is seeking the proper sales tax application to a variety of different sales scenarios.
RULING
I feel that your questions can best be answered by discussing the responsibilities of dealers with respect to the Virginia retail sales and use tax. §630-10-29.1© of the Virginia Retail Sales and Use Tax Regulations defines a "dealer" as every person who "sells at retail, or who offers for sale at retail, or who has in his possession for sale at retail, or for use, consumption or distribution or for storage to be used or consumed in this state, tangible personal property."
As a general rule, the Virginia sales tax is applicable when the customer takes actual possession of the product in the state of Virginia. If the product is shipped out-of-state either by the seller's truck or by common carrier, the sale would be exempt as interstate commerce. If the customer should enter into the state of Virginia and pick the product up in his own truck, this transaction would be subject to the Virginia sales tax due to the fact that possession was taken in Virginia. Dealers may purchase all items for resale under a resale exemption certificate, Form ST-10.
In regard to sales to contractors, Regulation 630-10-27 addresses contractors with respect to real estate and defines a contractor as follows:
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- A contractor is defined as any 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, whether such person be a prime contractor or a subcontractor. Unless otherwise noted, the law treats every contractor as the user or consumer of all tangible personal property furnished to him in connection with real property construction, reconstruction, installation, repair, and similar contracts.
- A contractor is defined as any 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, whether such person be a prime contractor or a subcontractor. Unless otherwise noted, the law treats every contractor as the user or consumer of all tangible personal property furnished to him in connection with real property construction, reconstruction, installation, repair, and similar contracts.
Direct sales to federal, state or local government entities would be exempt from the sales and use tax. However, like all exempt sales, the taxpayer will be required to maintain in its files a valid certificate of exemption.
Sales tax collection obligations to states other than Virginia should be addressed by the state in question.
I have enclosed a Combined Registration Application, Form R-1, for use by the taxpayer to register for the collection of the sales and use tax. If you should have any further questions pertaining to a specific situation, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner