Document Number
Tax Type
Retail Sales and Use Tax
Sales price included installation charges
Basis of Tax
Date Issued

February 21, 1997

Re: Ruling Request: Retail Sales and Use Tax


This will reply to your letter in which you request a ruling regarding the application of sales and use tax to sales by your client (the Company) to distributors in Virginia. I apologize for the delay in responding to your letter.


The Company is a multi-level marketing company who will sell an oil filter device to independent distributors that will resell the product to retail customers. The oil filter device will be installed on the customer's vehicle. The distributor is charged a lump sum charge of $295 for the product which includes administrative fees and installation charges. You ask if the $295 is subject to the sales tax in Virginia. In a recent conversation with a member of my staff, you also requested information regarding an agreement where multi-level marketing companies collect and remit the sales tax on behalf of their distributors.


Code of Virginia § 58.1-602 (copy enclosed) defines "sales price” to be "...the total amount for which tangible personal property or services are sold, including any services that are a part of the sale...without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service cost, losses or any other expenses whatsoever." Because the charge for the oil filter device includes services and labor charges as part of the sale of the product, the total charge is taxable.

I have enclosed Public Document (P.D.) 93-143 (6/9/93) which addresses the department's policy as it applies to multi-level marketing companies. A copy of an agreement is enclosed. Should your client wish to enter into an agreement, the enclosed registration form must be completed and returned with the agreement. If not, please provide to the department a list of your client's distributors so that we may advise them of their obligation to register and collect the tax.

You may return the information to the Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880. If you have any questions, you may contact *************** at****************.


Danny M. Payne
Tax Commissioner


Last Updated 08/25/2014 16:46