Document Number
Tax Type
Retail Sales and Use Tax
Landscape contractor
Taxability of Persons and Transactions
Date Issued
February 19, 1997

Re: § 58.1-1821 Application: Retail Sales and Use Tax


This is in response to your letter in which you seek correction of a sales and use tax assessment issued to ********** (the "Taxpayer") for the period April 1995 through March 1996.


The taxpayer is a wholesale landscape contractor located in Maryland. The only business the Taxpayer conducts in Virginia is to provide landscape maintenance to one Virginia customer. The terms of the maintenance contract require that the Taxpayer provide: (1) landscape materials such as trees, shrubbery and flowers, and (2) landscape services, including mowing, trimming, pruning, mulching and weed killing.

You contend that the Taxpayer is the consumer of all tangible personal property used in its landscape maintenance contracts. In this regard, the Taxpayer paid the tax to its Maryland suppliers on the purchase of property used to satisfy its contractual obligations with the Virginia customer. You also maintain that the applicable sales and use tax regulation supports your position as does conversations you had (after the close of the audit) with representatives from the department.

As a result, the Taxpayer agrees to charge the Virginia sales tax on a prospective basis, but does not agree that the audit assessment is appropriate.


Virginia Regulation (VR) 630-10-40 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 not the provision of services with respect to real estate:
    • 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 those instances when a business is deemed to be a contractor:
    • 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. The Taxpayer in the instant case was deemed to be a contractor with respect to many of its activities. The sales tax was assessed on those transactions which are taxable retail sales under this regulation - the furnishing and transplanting of plants.

As addressed in the attached Public Documents, this position has been consistently applied in analogous situations. Accordingly, the audit has been properly assessed. In making this determination, I am mindful that the Taxpayer contacted the department after the audit, but did not contact the department at the start of its business activity in Virginia. While I regret any misinformation you were provided verbally, the department's position on this issue has been made publicly available to all taxpayers as evidenced by the enclosed documents.

There appears to be no evidence at this time which allows me to accept the Taxpayer's proposal that the assessment be waived. In fact, I understand that the audit results in this case were mitigated because the auditor did not include the Taxpayer's labor charges in the assessment regardless that those labor charges were not separately stated in accordance with the regulation. I further understand that the Taxpayer may be afforded some relief through Maryland Code § 11-216 which provides a refund mechanism for sales and use taxes paid in Maryland on property used in another state.

If you have any questions regarding this letter, please contact****** in my Office of Tax Policy at ****.


Danny M. Payne
Tax Commissioner


Last Updated 08/25/2014 16:46