Tax Type
Retail Sales and Use Tax
Description
Services; Professional or personal; Duplicating services
Topic
Taxability of Persons and Transactions
Date Issued
09-29-1994
September 29, 1994
Re: Request for Ruling: Retail Sales and Use Tax
Dear**************
This will reply to your letter in which you request a ruling regarding the application of the retail sales and use tax to ****************(the "Taxpayer").
FACTS
The Taxpayer is engaged in the business of providing duplicating services for attorneys. Attorneys pay the Taxpayer a flat fee; in return, the Taxpayer gathers information and court records, assembles the information according to the attorney's directions and creates a binder or a book which is filed with the courts. Copies are often provided to other parties involved in the legal matter. The number of copies produced varies, depending upon the number of people involved in the case.
You ask if the sales and use tax should be charged by the Taxpayer and, if so, on what basis.
RULING
Va. Code §58.1-609.5(1) provides an exemption from the sales and use tax for "[p]rofessional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made...." 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. See Virginia Regulation (VR) 630-10-97.1 (copy enclosed).
Based on the information provided, the true object of the transaction is the document sold to the customer. While the Taxpayer is providing a personal service in the rendition of its operations, the object of the transaction is to secure the property which it produces - the binder, book or document. Therefore, the entire charge, including the charge for any services provided, is taxable.
Similarly, when in addition to providing the services described above, the Taxpayer also produces numerous copies of the document, the Taxpayer is engaged in the sale of tangible personal property and is required to register as a dealer with the department and to collect the tax on the entire charge.
If you have any questions regarding this matter, please contact the department.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/7222F
Rulings of the Tax Commissioner