Tax Type
Retail Sales and Use Tax
Description
Landscape contractors
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
07-18-1994
July 18, 1994
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This will reply to your letter of June 20, 1994 in which you request a ruling on the application of the sales and use tax to landscape contractors.
Virginia Regulation (VR) 630-10-40(B), copy enclosed, provides that "when a nurseryman, florist or other person makes retail sales of shrubbery and other items, and as part of the transaction agrees to transplant them on the land of the purchaser for a lump sum, the tax applies to the total charge. The tax does not apply to the charge for transplanting if the charge is separately stated on the invoice."
However, this regulation goes on to state in subsection (C) that, "any landscaper, nurseryman, or contractor who goes beyond the sale and planting of shrubbery, sod, etc. and contracts to grade, seed and fertilize lawns or to provide periodic fertilizing or weed killing treatments is deemed to be a consumer of all tangible personal property used in performing such service and must pay the tax on such property at the time of purchase." (Emphasis added).
As can be seen from the above, a landscape contractor is a retailer with respect to plant materials sold and transplanted by him in the performance of a contract. It is only when a landscape contractor goes beyond transplanting, i.e., fertilizing, mulching, weeding, etc., that he becomes a using or consuming contractor, and only for those items consumed in providing such services. This is the long-standing policy of the department. See P.D. 87-130 (4/21/87) (copy enclosed).
In your letter, you describe a situation in which a landscape contractor sells trees and shrubs and plants them, and also prepares the soil, adds fertilizers, lime, mulch, peat moss and grades the bedding site and periodically checks the progress of the plants. In such a case, the landscape contractor would be a retailer of trees and shrubs and would be required to collect sales tax from its customers on the sales price of the plants. The contractor may purchase plants, trees and shrubs exempt from tax pursuant to a valid resale exemption certificate. The contractor would be considered a using or consuming contractor for the fertilizers, lime, mulch, etc. used in providing its services and must pay the tax on such items at the time of purchase or, if the contractor's supplier is not registered to collect Virginia tax, remit the tax directly to the department, based on the cost price of the items. The contractor should not charge the tax on such items when billing its customers.
If you have additional questions regarding this matter, please contact the department.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner