Tax Type
Retail Sales and Use Tax
Description
Services-Professional or Personal
Topic
Taxability of Persons and Transactions
Date Issued
07-24-1998
July 24, 1998
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This will reply to your letter of May 6, 1998, in which you request a ruling on the application of Virginia's sales and use tax to the business operations of your client, (the "Taxpayer').
FACTS
The Taxpayer provides document shredding services to Virginia businesses. The Taxpayer owns trucks which travel to customers' locations. The customers' documents are shredded with large shredding machines that are located on the Taxpayer's trucks. The Taxpayer charges by the minute for the shredding service.
RULING
Code of Virginia Sec. 58.1-609.5(1) provides an exemption for "[p]rofessional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made....'' Code of Virginia Sec. 58.1-602 defines "sale' as "any transfer of title or possession, or both, ... of tangible personal property and any rendition of a taxable service for a consideration....'
Based on the information presented, the Taxpayer does not make sales of tangible personal property to customers nor does it provide tangible personal property to customers in connection with the shredding services. The Taxpayer is providing a nontaxable service to its customers. Charges billed for the shredding services are exempt from the sales and use tax.
Title 23 of the Virginia Administrative Code (VAC) 10-210-4040(E) (copy enclosed), discusses the tax responsibilities of service providers and states that:
As the regulation above indicates, the Taxpayer should pay Virginia sales and use taxes on purchases of tangible personal property in Virginia. If the Taxpayer purchases tangible personal property in another state and the property is subsequently used in Virginia and a sales or use tax has not been properly paid to the other state, the Taxpayer is liable for use tax in Virginia. I have enclosed a copy of 23 VAC 10-210-6030, which provides information about Virginia's use tax.
I trust the foregoing information has addressed the Taxpayer's concerns. If the Taxpayer has any questions, please contact ***** in the Office of Tax Policy at *****.
Sincerely,
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This will reply to your letter of May 6, 1998, in which you request a ruling on the application of Virginia's sales and use tax to the business operations of your client, (the "Taxpayer').
FACTS
The Taxpayer provides document shredding services to Virginia businesses. The Taxpayer owns trucks which travel to customers' locations. The customers' documents are shredded with large shredding machines that are located on the Taxpayer's trucks. The Taxpayer charges by the minute for the shredding service.
RULING
Code of Virginia Sec. 58.1-609.5(1) provides an exemption for "[p]rofessional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made....'' Code of Virginia Sec. 58.1-602 defines "sale' as "any transfer of title or possession, or both, ... of tangible personal property and any rendition of a taxable service for a consideration....'
Based on the information presented, the Taxpayer does not make sales of tangible personal property to customers nor does it provide tangible personal property to customers in connection with the shredding services. The Taxpayer is providing a nontaxable service to its customers. Charges billed for the shredding services are exempt from the sales and use tax.
Title 23 of the Virginia Administrative Code (VAC) 10-210-4040(E) (copy enclosed), discusses the tax responsibilities of service providers and states that:
-
- A service provider is the taxable user and consumer of all tangible personal property purchased for use in providing exempt services. If a supplier fails to collect the tax from a service provider, the provider shall remit use tax to the department as provided in 23 VAC 10-210-6030.
As the regulation above indicates, the Taxpayer should pay Virginia sales and use taxes on purchases of tangible personal property in Virginia. If the Taxpayer purchases tangible personal property in another state and the property is subsequently used in Virginia and a sales or use tax has not been properly paid to the other state, the Taxpayer is liable for use tax in Virginia. I have enclosed a copy of 23 VAC 10-210-6030, which provides information about Virginia's use tax.
I trust the foregoing information has addressed the Taxpayer's concerns. If the Taxpayer has any questions, please contact ***** in the Office of Tax Policy at *****.
Sincerely,
Rulings of the Tax Commissioner