Tax Type
Retail Sales and Use Tax
Description
Construction; Floor covering sold to government
Topic
Taxability of Persons and Transactions
Date Issued
07-26-1996
July 26, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear**********
This will reply to your letter of May 9, 1996 in which you seek correction of the recent retail sales and use tax audit of your client, **************(the "Taxpayer"), for the period of January 1993 through December 1995.
FACTS
The Taxpayer is an out of state floor covering contractor in the business of furnishing, installing, and making retail sales of floor coverings. The Taxpayer is primarily engaged in providing flooring and floor covering to government agencies. The Taxpayer is taking exception to sales made to the federal government and also sales made to a floor covering company in Virginia for which they have obtained a Florida resale exemption certificate.
DETERMINATION
Virginia Regulation (VR) 630-10-27.G (copy enclosed) provides that persons selling and installing floor coverings (as distinguished from the floors themselves) are considered a retailer with respect to such items and not a using or consuming contractor. This regulation goes on to provide that a retailer shall be deemed to be any person who maintains a retail or wholesale place of business and an inventory, and performs installation as part of or incidental to the sale of floor coverings. Persons not classified as retailers with respect to floor coverings shall be considered a using and consuming contractor and must pay the sales tax on such items at the time of purchase. Based on the foregoing, the taxing event with respect to floor covering is determined in accordance with the installers method of operation.
Based on the information provided in your letter, and after further review of this information by the auditor, it is apparent that the sales to Resource Services in August 1993 represent a sale, without installation, to the Federal government. Based on these findings, I will agree to remove these sales from the audit.
In reference to the Taxpayer's sales to ************* the Taxpayer has provided a Florida resale exemption certificate and requests that such sales be removed from the audit as a sale for resale. Based on the provisions of the regulations set forth above, in order to purchase floor covering for resale tax exempt in Virginia, the purchaser must maintain a retail or wholesale place of business and an inventory in Virginia. Provided the Taxpayer can obtain a Virginia retail sales and use tax exemption certificate, I will agree to remove these sales from the audit. Otherwise, I must deem such sales subject to the Virginia retail sales and use tax.
If you should have any further questions, please contact*****, Office of Tax Policy, at**** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11224K
Rulings of the Tax Commissioner