Tax Type
Retail Sales and Use Tax
Description
True object of government contract
Topic
Exemptions
Date Issued
07-18-1991
July 18, 1991
Re: Request for Ruling: Sales and Use Tax
Dear*********************
This will reply to your letter in which you request a ruling as to the application of sales and use tax to contractual arrangement with the Federal Government.
In determining the sales and use tax application to government contracts, we must first determine whether the contract involves sales to the government entity or whether the contract involves the provisions of a service. As a general rule, sales to a government entity are exempt, while the providing of a service to a government entity would subject the provider to the sales and use tax on all tangible personal property involved in the rendering of such service. I have enclosed copies of prior rulings, PD 89-206 (7/28/89) and PD 88-159 (6/23/88), dealing with this issue. I have also enclosed copies of Virginia Regulation (VR) 630-10-27(J) and VR 630-10-45(E), dealing with government contracts and government contractors respectively.
I trust the enclosed will answer any questions you may have.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner