Tax Type
Retail Sales and Use Tax
Description
Government contractor; Pumps and boilers
Topic
Property Subject to Tax
Date Issued
01-11-1993
January 11, 1993
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This will reply to your letter of July 24, 1992 regarding the application of the tax to certain transactions between **** (the Taxpayer) and the federal government.
FACTS
The Taxpayer operates as a general/mechanical contractor which sells and installs pumps and boilers for the federal government. You maintain that these installations are made in existing real estate, that the pumps and boilers do not lose their identity as tangible personal property upon installation and do not become part of real property.
RULING
Va. Code §58.1-608(A)(1)(e) provides that the tax does not apply to the sale of tangible personal property for use or consumption by the federal government. Purchases of tangible personal property for resale to the federal government may be made exempt of the tax by giving your vendors a Certificate of Exemption, Form ST-10.
However, the Taxpayer may purchase exempt for resale only those items which do not lose their identity as tangible personal property upon installation. Pumps and boilers which become real property upon installation are deemed to be used and consumed by the contractor regardless that the purchase of these items is made in connection with construction contracts with the federal government. In these instances you must pay the tax to your vendor on the cost price of the tangible personal property. If the vendor is not registered to collect the tax, You must remit the tax directly to the department as noted on line 2 of Your Virginia Out of State Dealer's Use Tax Return, Form ST-8.
Furthermore, there is insufficient information in your correspondence which allows me to determine if the pumps and boilers do in fact remain tangible personal property upon installation or if, conversely, become part of realty. You may wish to request a technical decision in regard to this question by describing the method of installation as well as the intended use of the pumps and boilers. Such a request may be addressed to the department's Technical Services Section at P. O. Box 1880, Richmond, Virginia 23282-1880.
I hope this responds to your questions, but let the department know if You need additional information.
Sincerely .
W. H. Forst
Tax Commissioner
OTP/6311I
Rulings of the Tax Commissioner