Tax Type
Retail Sales and Use Tax
Description
Orders Taken by a Virginia Florist and Transmitted to a Second Florist
Topic
Taxability of Persons and Transactions
Date Issued
04-20-1992
April 20, 1992
Re: Request for Ruling: Retail Sales and Use Tax
Dear**************
This will reply to your various letters in which you seek information concerning the application of sales and use tax to sales of floral arrangements by**********(the Taxpayer).
FACTS
The Taxpayer, a Virginia corporation, offers a floral service responsible for the nationwide distribution of flower orders placed via a home computer network. Consumers within and without Virginia place orders with the Taxpayer for flowers via their personal computers for nationwide delivery. The orders are transmitted to a central computer without Virginia and subsequently downloaded by a national floral wire service for delivery by florists throughout the United States.
The Taxpayer has contracted with a grocery retailer with multistate locations including Virginia, to receive orders for flowers through the usage of a toll free telephone number on site at the stores. The orders are initially taken by a telemarketing company without Virginia who inputs the orders into a computer and the orders are subsequently downloaded by the same national floral wire service as indicated in the above situation.
The Taxpayer has entered into an agreement with a major baby products manufacturer to provide floral arrangements to include baby products. Flower orders are received by a telemarketing company in the same manner as the above transaction via a toll free telephone number advertised nationwide.
The Taxpayer has contracted with a regional telephone company to receive orders via videotext technology available to customers of the telephone company. The orders are placed by customers from their homes, within and without Virginia, through video screens connected by telephone lines and transmitted to a service bureau without Virginia and subsequently downloaded by the same national floral wire service previously mentioned.
And finally, the Taxpayer has also contracted with a Virginia company that offers a service in which bar codes are scanned utilizing the company's scan phone system installed in their customers' homes or at kiosks located in shopping centers. The orders are transmitted to the company's computer system in Virginia and again downloaded by the national floral wire service.
The Taxpayer requests a determination of the correct taxing jurisdiction with regard to the above situations.
RULING
The application of the Virginia sales and use tax to transactions involving the florist industry are governed by Virginia Regulation (VR) 630-10-40 (copy enclosed) which provides in pertinent part, that orders from customers taken by a Virginia florist and telephoned or telegraphed to a second florist, either within or without Virginia, are taxable to the first florist. Thus, the tax is due and payable to Virginia on any floral order which is first taken by a Virginia florist, who conducts transactions through a national floral wire service .
I will address the five situations individually:
Home Computer Network
The Taxpayer receives orders via a home computer network, which acts as the instrument of transmittal of the orders to a floral wire service for processing at the direction of the Taxpayer. Since the Taxpayer is the first florist to receive the order, Virginia tax applies regardless of where the orders are delivered or who ultimately fills the order.
Grocery Retailer
The Taxpayer receives orders via a toll free telephone number located at the store sites of a grocery retailer with locations in three states and Virginia. The telemarketing company simply acts as the Taxpayer's agent, therefore the order is first placed with a Virginia florist and thus Virginia tax applies.
Advertising Insert
The Taxpayer solicits flower orders by national advertisement and receives the orders via a toll free telephone number employing the same telemarketing company mentioned above. The telemarketing company is again acting as an agent for the Taxpayer, therefore the tax implications are the same.
Videotext Technology
The Taxpayer receives flower orders via video screens connected through telephone lines and transmitted to a service bureau without Virginia where the orders are transferred to the national floral wire service for processing. The videotext technology is simply the medium through which the order is received, thus, the Taxpayer as the first florist to receive the order is required to collect the tax.
Scan Phone System
The Taxpayer receives flower orders via a scanning system which utilizes bar codes to identify the purchases. The service is offered by a Virginia company using its computer system for transmission of the orders. The company offering the service has its operations in Virginia and again, the Taxpayer as the first florist to receive the order must collect the Virginia tax.
In regards to the situations presented, the Taxpayer is correct in remitting the Virginia sales and use tax on its sales of flowers.
My decision is based on the specific facts set forth in the Taxpayer's correspondence and any alterations to these transactions may change the application of the tax. In addition, I cannot make a determination of the taxability of the aforementioned transactions for other states.
If you have additional questions please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
TPD/5595J
Rulings of the Tax Commissioner