Tax Type
Retail Sales and Use Tax
Description
Repair Services; Remanufacture of Toner Cartridges
Topic
Taxability of Persons and Transactions
Date Issued
08-30-1991
August 3O, 1991
Re: Request for Ruling: Retail Sales and Use Tax
Dear***************
This will reply to your letter requesting a ruling on behalf of your client, ************** ("the Taxpayer"), on the application of the sales and use tax to the remanufacture of lazer printer cartridges.
FACTS
The Taxpayer is engaged in the business of "remanufacturing" toner cartridges for use in lazer printers, copiers, fax machines and similar business equipment by consumers. This process involves the disassembling of the cartridge; the cleaning, adjustment, and repair of the cartridge, if necessary; the refilling of the cartridge with toner; and the replacement of minor parts or other parts such as the drum and felt wand. The cartridges are restored for direct sale to consumers or for office supply businesses who receive cartridges for remanufacture from their own customers. The Taxpayer also makes outright sales of toner to other remanufacturers of cartridges.
The Taxpayer requests a ruling on the application of the sales and use tax to the above transactions. Although the Taxpayer has recently been audited by the department, it is my understanding that the Taxpayer does not contest the audit findings.
RULING
Virginia Regulation (VR) 630-10-37(A) defines "repair" as "an operation that restores a used or worn piece of tangible personal property." The application of the sales and use tax to charges for repair and to repair businesses in general is set forth in VR 630-10-90, copy enclosed.
Based on the information presented by the Taxpayer and the regulations cited above, the Taxpayer is engaged in the repair of tangible personal property and is required to collect and pay the tax on its sales. The tax will apply to the Taxpayer's total charge to its customer; however, repair labor charges may be separately stated on the invoice and excluded from the tax base. If the Taxpayer does not separately state the parts, materials and supplies charges from the repair labor charges, the tax will apply to the total charge including repair labor. However, the Taxpayer's sales to other remanufacturers for resale will be nontaxable, provided the Taxpayer's customer furnishes it with a certificate of exemption.
The Taxpayer's purchases of parts, materials, and supplies (e.g., toner, drums, wands, etc.) that are transferred to customers may be purchased exempt of the tax under a resale certificate of exemption (Form ST-10, copy enclosed). The tax must be paid on the equipment, tools, and other tangible personal used in performing the repair work.
Although the Taxpayer "remanufactures" toner cartridges, it is not a manufacturer "in the industrial sense" and as such does not qualify for the exemption provided in Va. Code §58.1-608(A)(3)(b) for its purchases of tools, equipment, etc.
I hope this answers your questions, but please contact the department if you need any additional information.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner