Tax Type
Retail Sales and Use Tax
Description
Museums; Real property
Topic
Taxability of Persons and Transactions
Date Issued
09-12-1996
September 12, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear********
This will reply to your letter of June 21, 1996 in which you seek correction of the recent sales and use tax audit of ********** (the "Taxpayer") for the period of March 1993 through December 1995.
FACTS
The Taxpayer is a diversified agricultural enterprise primarily devoted to the production of cattle and farm products for market. Ancillary to the normal course of business, the Taxpayer constructed a museum-like facility to exhibit a number of period pieces and historical displays. The contested area consists of fabricated exhibits which are contained within the facility. In all cases these exhibits contain both structural materials which are attached to the building itself and also tangible personal property which is exhibited. The auditor held the exhibits as the purchase of tangible personal property. The Taxpayer takes the position that the exhibits are a part of realty and the contractor installing the exhibits is the using and consuming contractor and liable for the tax on all materials making up the exhibits.
DETERMINATION
The issue in dispute is whether the exhibits which are attached to the building become real property upon installation or remain as tangible personal property. The department has consistently looked to the "intent" of the party doing the installation to determine whether an item becomes real property or remains tangible personal property. As provided in your letter, and also in the auditors comments, the structural components of all the exhibits in question are attached to the building, but do not become a structural component of the building. It is also noted that it is the "intent" of the Taxpayer that all exhibits remain where they are installed unless the entire facility is moved, in which case disassembling of the exhibits would be required prior to moving them.
Based on all of the above, I find that any portion of the exhibits in question which are attached to the building structure and are intended to remain a permanent part of the building would qualify as real property. In addition, while the exhibit structure itself may be permanently attached to the building, all of the exhibits in question contain tangible personal property which does not become permanently affixed to realty. This being the case, I must find that all such tangible personal property purchased as part of the exhibit shall remain taxable.
An auditor from our *******District Office will contact the Taxpayer in order to make the necessary revisions. If you should have any questions, please contact *********** , Office of Tax Policy, at *************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11369K
Rulings of the Tax Commissioner