Tax Type
Retail Sales and Use Tax
Description
Machine and welding shop; Fabrication for real property contracts
Topic
Property Subject to Tax
Date Issued
04-12-1993
April 12, 1993
Re: §58.1-1821 Application: Retail Sales & Use Tax
Dear***************
This will reply to your letter of May 29, 1992 in which you seek correction of a sales and use tax assessment to your client,****************(the"Taxpayer"), for the period November 1987 through October 1990.
FACTS
The Taxpayer is a machine and welding shop engaged in fabricating tangible personal property for resale and some fabrication and installation with respect to real property contracts. You contest the tax assessed on the purchase of tangible personal property used in fabricating modular caging and sold to a state agency. The auditor held that the caging was for use in real property construction contracts and thus the Taxpayer should have paid the tax on the materials used in constructing such. You maintain that the caging remained tangible personal property and thus was properly sold exempt of the tax to the state agency.
Further, you contest a part of the assessment which extends beyond the three year statute of limitations provided for in Va. Code §58.1-634
DETERMINATION
The caging at issue can be easily taken apart and moved using simple tools without damaging or altering the caging or the building. Further, it is attached to the floor with metal footings and anchored to the walls.
Accordingly, I find that the modular caging in question is in fact tangible personal property. Therefore, the tax assessed on such will be removed from the assessment. Further, consistent with the three year statute of limitations provided in Va. Code §58.1-634, the assessment will be revised to remove all tax and interest assessed for the period prior to April 1988. Finally, upon revision of the audit assessment, the application of the penalty will be reviewed. If it is found that the Taxpayer meets the appropriate compliance ratios, the penalty will be abated.
Upon conclusion of the above revisions, if it is found that the Taxpayer is due a refund, such a refund will be issued as soon as practicable. In the alternative, if it is found that any remaining tax and interest are due, a revised Notice of Assessment will be mailed to the Taxpayer and should be paid within 30 days to avoid the accrual of additional interest and collection activities.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6229H
Rulings of the Tax Commissioner