Tax Type
Retail Sales and Use Tax
Description
Services; Professional or personal; Computer-generated lists
Topic
Taxability of Persons and Transactions
Date Issued
06-04-1993
June 4, 1993
Re: Request for Ruling: Sales and Use Tax
Dear*************
This will reply to your recent letter in which you request a ruling as to whether the Virginia sales and use tax is applicable to computer services provided by********** (the "Taxpayer").
FACTS
The Taxpayer is in the business of providing computer generated lists to customers. The Taxpayer's customers complete a personal profile questionnaire which is used to generate a personalized list to suit the customer's needs. The Taxpayer is requesting a ruling as to whether the Virginia sales and use tax is applicable to the services it provides.
RULING
Va. Code §58.1-608(A)(5)(a) provides an exemption from the sales and use tax for "professional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made." In addition, Virginia Regulation (VR) 630-10-97.1(B)(2) provides that:
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- In order to determine whether a particular transaction which involves both the rendering of a service and the provision of tangible personal property constitutes an exempt service or a taxable retail sale, the "true object" of the transaction must be examined. If the object of the transaction is to secure a service and the tangible personal property which is transferred to the customer is not critical to the transaction, then the transaction may constitute an exempt service. However, if the object of the transaction is to secure the property which it produces, then the entire charge, including services provided, will be taxable.
- In order to determine whether a particular transaction which involves both the rendering of a service and the provision of tangible personal property constitutes an exempt service or a taxable retail sale, the "true object" of the transaction must be examined. If the object of the transaction is to secure a service and the tangible personal property which is transferred to the customer is not critical to the transaction, then the transaction may constitute an exempt service. However, if the object of the transaction is to secure the property which it produces, then the entire charge, including services provided, will be taxable.
If you should have any further questions, please feel free to contact this office.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6384K
Rulings of the Tax Commissioner