Document Number
Tax Type
Retail Sales and Use Tax
Delivery-related charges
Basis of Tax
Date Issued

February 20, 1997

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


In your letter of December 12, 1996, you seek correction of the sales and use tax audit assessment issued to ***************** (the Taxpayer).


The Taxpayer operates apartment complexes. An audit for the period January 1995 through August 1996, resulted in an assessment of consumer use tax on untaxed purchases of tangible personal property used or consumed in its business.

The Taxpayer takes exception to the tax assessed on the lump-sum charges for furniture purchased from a North Carolina vendor who personally delivered the property to the Taxpayer in Virginia. The Taxpayer has submitted its breakdown of two billings and has separately stated the charges for the retail sales price of the furniture and other charges in connection with the sale for delivery, set-up, lodging, miscellaneous supplies, and North Carolina sales and use tax. Based on the information furnished, the Taxpayer requests revision of the audit to remove charges for delivery, set-up, lodging, miscellaneous supplies, and North Carolina sales and use tax paid.


Code of Virginia § 58.1-205 places the burden of proof upon any taxpayer assessed with a tax to show that an assessment is erroneous. Based on the information and documentation furnished the department, the Taxpayer has not met its burden of proof.

For example, the information presented consists of copies of the original invoices which only show lump-sum charges. However, the Taxpayer has not furnished any corrected invoices from the vendor to show the separate charges claimed by the Taxpayer. In the absence of such evidence, there is no basis upon which to revise the audit.

Accordingly, if the Taxpayer can obtain revised invoices from the seller detailing the separate charges in question, I will consider revising the audit to remove charges for delivery and North Carolina sales and use tax. Since the tangible personal property was delivered by the vendor directly to the Taxpayer in Virginia, North Carolina sales and use tax should not apply to the transactions in question. Concerning the other charges at issue, I have addressed them separately below.

Set-up charge

Generally, all charges for services rendered in connection with the retail sale of tangible personal property are taxable. The only exceptions are those specifically exempted by statute. For example, the statute contains no exemption for separately stated assembly charges. As such charges generally represent labor performed for putting together of parts to make a completed product, the department ha$ consistently held that assembly charges are taxable.

Furthermore, assembly charges do not constitute exempt installation labor charges. Code of Virginia § 58.1-609.5(2) exempts from the tax separately stated labor charges for installing property sold. Although "installing" is not defined by statute or regulation, Webster's II New College Dictionary (1995) defines "install" as “[t]o set in position or adjust for use." In addition, "install" is defined in Black's Law Dictionary (1990) as "[t]o set up or fix in position for use or service." Accordingly, exempt installation charges include set-up charges which are merely for setting the tangible personal property in place or adjusting the property for use.

Based on the foregoing, the audit will be revised to remove separately stated set-up charges provided the Taxpayer furnishes the department a statement from the vendor certifying that its set-up charges do not consist of charges for assembly labor.


In P. D. 96-88 (5/14/95, copy enclosed), the department ruled that reimbursable expenses incurred by any retailer for employee travel and accommodations (e.g., meals and lodging) and billed to its customer in connection with the retail sale of tangible personal property are subject to the tax. For the reasons stated in the above cited ruling, the lodging charges billed to the Taxpayer in connection with the retail sale of tangible personal property are similarly taxable.

Miscellaneous supplies

No evidence has been furnished the department to support the Taxpayer's claim that an exemption applies to its purchases of miscellaneous supplies. As the Taxpayer is not entitled to an exemption on its purchases of tangible personal property, and absent evidence to the contrary, the tax applies to Taxpayer's purchases of supplies.

Requested information

The requested information (l.e.1 revised Invoices and certified statement on set-up charges) should be sent to the attention of ****, Department of Taxation,****** Audit Unit, Post Office Box 5245, Richmond, Virginia 23220, within the next 60 days. If such documentation is found acceptable, the audit will be revised in accordance with this determination.

If the Taxpayer is unable to furnish the requested information within the time allotted, the outstanding liabilities should be paid. If in the future the Taxpayer is able to show that the assessment requires adjustment, it may request a tax refund provided the department receives the refund request within three years of the date of a assessment.

If you have any questions regarding this matter, you may contact******** of the department's Office of Tax Policy at**************


Danny M. Payne
Tax Commissioner


Last Updated 08/25/2014 16:46