Tax Type
Retail Sales and Use Tax
Description
Construction; Permanent truck scales
Topic
Taxability of Persons and Transactions
Date Issued
06-12-1995
June 12, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear*********
This is in response to your letter of April 6, 1995 on behalf of an unidentified client regarding the application of the tax to truck scales. Specifically, you question certain findings set out in Public Document 94-154 (5/13/94).
FACTS
In P.D. 94-154, the department determined that truck scales may become real property upon installation based on certain criteria (i.e., model design, accessories and types of approaches). That document further indicated that truck scales requiring poured concrete approaches or other permanent installations became real property upon installation. In those instances, the installer is deemed to be a contractor with respect to real estate under the provisions of Virginia Regulation (VR) 630-10-27.
You take issue with some of these provisions, and maintain that the construction of a pit or the construction of concrete approaches do not convert truck scales from personal property to realty. In making this claim, you indicate that real property is generally defined to be permanent, fixed and immovable, but that scales are designed to be portable and are frequently removed and reinstalled at a different location.
You also submit a letter from the Virginia Department of Agriculture and Consumer Affairs, Office of Weights and Measures, pointing out that the approach and foundation of scales are considered to be "user requirements" and are treated and inspected as separate features from the scale itself. From this information, you maintain that approach ramps are not part of the scale installation.
DETERMINATION
The determination set out in P.D. 94-154 was based primarily on common law distinctions between real and tangible property. That determination also relied on information provided by scale manufacturers, the department's on-site inspections of specific truck scale installations, and, as enclosed, guidelines used by the Virginia Association of Assessing Officers (VAAO) which classify truck and rail scales as realty.
The Virginia Supreme Court addressed the distinctions between real and tangible property in Danville Holding Corp. v. Clement, 178 Va. 223 (1941) and confirmed in later cases. See, for example, Transcontinental Gas Pipe Line Corporation v. Prince William County. 210 Va. 550 (1970).
In Danville Holding. the Court held that:
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- The general course of modern decisions in American courts no longer follows the old common law doctrine that the mode of annexation, slight and temporary, or immovable and permanent, is the single criterion for determining the character of chattels as fixtures. Today, emphasis is placed upon the nature of the article and upon the uses and purposes for which it is held or employed. The method of the annexation to the realty receives slight consideration and then only as a circumstance from which the intention of the annex or may be deduced.
- The general course of modern decisions in American courts no longer follows the old common law doctrine that the mode of annexation, slight and temporary, or immovable and permanent, is the single criterion for determining the character of chattels as fixtures. Today, emphasis is placed upon the nature of the article and upon the uses and purposes for which it is held or employed. The method of the annexation to the realty receives slight consideration and then only as a circumstance from which the intention of the annex or may be deduced.
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Also, literature from scale manufacturers (i.e., Fairbanks and Weight-Tronix) makes a differentiation between portable and permanent truck scales and between portable and permanent installations. In making this distinction, models may vary in regard to sizes, capacities and optional accessories for installation procedures in either temporary or permanent applications. These factors are very persuasive in demonstrating the intended permanence of some truck scale installations, an intention which the Court has determined to be the controlling consideration in real v. tangible property questions.
Although the information from the Office of Weights and Measures is helpful, it is not dispositive of the issue for tax purposes. Therefore, while I understand your concerns, I must reaffirm the department's determination in P.D. 94-154 based upon the precedents established by the Virginia courts in Danville Holding and Transcontinental Pipeline. Likewise, I must also give great weight to the procedures used by local officials as set out in the VAAO guidelines.
I trust that this information answers your concerns. If you have further questions, please contact*********in my Office of Tax Policy at*********.
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- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
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OTP/9559
Rulings of the Tax Commissioner