Tax Type
Retail Sales and Use Tax
Description
Sales for resale; Food purchased for government contract
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
07-30-1991
July 30, 1991
Re: Request for Ruling: Retail Sales and Use Tax
Dear******************
This will reply to your letter of June 29, 1990 in which you request a ruling on the application of the Virginia retail sales and use tax on food purchased by*************(the Taxpayer) for use in a food service contract with the federal government.
FACTS
The Taxpayer is a government contracting firm that is preparing a bid on a contract with the federal government to provide meals. The Taxpayer will be required to purchase the food, prepare it, serve the meals and then bill the federal government at the end of each month based on the number of meals served. The Taxpayer requests a ruling on the applicability of tax on its purchase of food.
RULING
Va. Code § 58.1-603 imposes a tax on the retail sale of tangible personal property within the Commonwealth. However, Va. Code § 58.1-602 defines the term "retail sale" to mean a sale to any person for any purpose other than resale in the form of tangible personal property..."
In the present case, the Taxpayer would have a contract with the federal government for the sale of tangible personal property, i.e., food. Although the Taxpayer would have to provide incidental services in connection with the contract, the goal of the contract is to procure the tangible personal property, e.g., the food. Therefore, any purchases of food made in fulfillment of the contract could be purchased under the resale exemption and resold to the federal government free of tax.
If you have any questions regarding this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner