Tax Type
Retail Sales and Use Tax
Description
Services; Miscellaneous service enterprises; Furniture finishing charges
Topic
Taxability of Persons and Transactions
Date Issued
05-08-1996
May 8, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear*************
This is in response to your letter of December 30, 1995, seeking correction of the assessment issued to ********* (the Taxpayer).
FACTS
The Taxpayer fabricates and sells unfinished and finished bookcases and cabinets to retail consumers. An audit for the period November 1992 through September 1995 resulted in an assessment of sales tax on untaxed finishing charges (i.e., charges for staining the furniture to be sold) made in connection with retail sales of the Taxpayer's products. The Taxpayer maintains that such charges are for services and should not be subject to the tax.
DETERMINATION
The retail sales tax is imposed on the gross sales price of tangible personal property when sold at retail or distributed in Virginia. Code of Virginia § 58.1-602 (also see Virginia Regulation 630-10-95, copy enclosed) defines "sales price" to mean:
-
- the total amount for which tangible personal property or services are sold, including any services that are part of the sale, valued in money, whether paid in money or otherwise, and includes any amount for which credit is given to the purchaser, consumer, or lessee by the dealer, without deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs losses or any other expenses whatsoever. (Emphasis added).
When selling finished bookcases and cabinets, the Taxpayer will apply a stain to the product. As the stain becomes a part of the property to be sold, the finishing charge is considered a service in connection with a sale. Absent any statutory exemptions to exempt such finishing charges from the sales and use tax, finishing charges are includible in the taxable sales price. Based on the foregoing and lacking any evidence that the Taxpayer received misinformation from the department, I find no basis for removing these charges from the department's audit.
To preclude further interest charges, please advise your client to send payment of***** to the department within 30 days. Such payment should be sent to the attention of **** at the department's Office of Tax Policy, P. O. Box 1880, Richmond, Virginia 23218-1880.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11158R
Rulings of the Tax Commissioner