Tax Type
Retail Sales and Use Tax
Description
Delivery charges and packing costs; Ready-mixed concrete
Topic
Basis of Tax
Date Issued
12-21-1993
December 21, 1993
Re: Ruling Request: Retail Sales and Use Tax
Dear**************
This is in response to your letter of August 18, 1993 regarding the application of the tax to sales of concrete by**************(the Taxpayer).
FACTS
The Taxpayer is a supplier of ready-mixed concrete to contractors. It is the Taxpayer's contention that under authority of Virginia Regulation (VR) 630-10-107, separately stated charges for the delivery of concrete which is produced in concrete mixer trucks are exempt from the tax.
Furthermore, the Taxpayer wishes to know the application of the tax to the sale and delivery of concrete which is produced in a mixing drum Prior to loading into a concrete mixer truck.
DETERMINATION
The department's position on the sale and delivery of concrete produced in concrete mixer trucks is addressed in the enclosed ruling dated 5/13/82 and more recently in Public Document 90-104 (7/3/90). Note that the earlier determination also discusses the application of the tax to "short haul" and "holding time" charges.
It is the department's position that concrete is manufactured in the mixer truck during transport. Therefore, since the concrete is not manufactured until the vehicle reaches its destination, no portion of the delivery charge can be excluded from the sales price as separately stated transportation.
The application of the tax to the sale of the product and to delivery would not in those situations where concrete is produced in drums at a plant. Because the concrete must continue to be agitated in the truck mounted mixing unit, the production process continues during transport. Therefore, the mounted mixing unit retains its status as exempt machinery used directly in manufacturing. Furthermore, all transportation charges remain taxable, even if such charges are separately stated.
I trust that this information answers your concerns, but please contact the department if you have further questions.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/7302I
Rulings of the Tax Commissioner