Tax Type
Retail Sales and Use Tax
Description
Florists and nurseries; Shrubs and plants
Topic
Taxability of Persons and Transactions
Date Issued
03-18-1994
March 18, 1994
Re: §58.1-1821 Application: Sales and Use Tax
Dear****************
This will reply to your letter of June 7, 1993, in which you submit an application for correction of sales and use tax assessed to your business as the result of an audit.
FACTS
As the result of a recent audit, your business was issued an assessment for its failure to collect sales tax on sales of shrubbery, plants, and similar items, which were subsequently transplanted by the business.
Your primary arguments against the assessment are that (1) landscape contractors should be treated no differently than other contractors (who pay the tax on their purchases, but do not collect sales tax from their customers) and (2) the department's regulations do not state in clear and precise terms the application of the tax to landscape contractors.
DETERMINATION
Contrary to your arguments, Virginia Regulation 630-10-40 (copy enclosed) very clearly sets out the application of the tax to nurserymen and landscape contractors.
The regulation specifically provides that the furnishing and transplanting of shrubs and plants is a taxable retail sale (and therefore not the provision of services with respect to real estate):
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The tax applies to retail sales of flowers, potted plants, shrubbery, nursery stock, sod, wreaths, bouquets, and similar items ...
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- When a nurseryman, florist or other person makes retail sales of shrubbery and similar 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.
The regulation also sets out when a business is deemed to be a contractor:
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- 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. The charge to the customer for providing the service is not subject to the tax.
Under the regulation, a business is deemed to be a contractor only with respect to the services it renders beyond the mere furnishing and transplanting of shrubs and plants. In this particular audit, the department deemed your business to be a contractor with respect to many of its transactions; sales tax was only assessed in instances where your business engaged in transactions which are taxable retail sales under the regulation, i.e., the furnishing and transplanting of shrubs and plants.
The inclusion of these transactions in the audit reflects long-standing department policy as set out in regulations dating back to 1966. As such, I do not find basis for waiving the assessment or agreeing to the offer in compromise set out in your letter.
The balance of the assessment as of the date of your appeal was***********if this amount is paid within the next 30 days, I will waive the interest that has accrued since the date of the appeal. In addition, I will be happy to have a representative of our Northern Virginia District Office to meet with you to resolve any questions you have relative to the department's policy on nurserymen and landscape contractors. If you wish to set up such an appointment, please contact our Audit Supervisor,*********** at***********.
Sincerely,
Danny M. Payne
Acting Tax Commissioner
Rulings of the Tax Commissioner