Tax Type
Retail Sales and Use Tax
Description
Services; Professional or personal; Material used to waterproof vehicles.
Topic
Taxability of Persons and Transactions
Date Issued
04-24-1998
April 24, 1998
Dear***********:
This will reply to your letter of April 6, 1998, in which you seek a ruling regarding the application of retail sales and use tax to certain transactions for ***** (the Taxpayer).
FACTS
The Taxpayer sprays polyurethane onto truck beds, horse trailers, and any area that requires a waterproof protection. The Taxpayer is requesting a ruling on the application of the tax to polyurethane spray applied to vehicles and other items. The Taxpayer indicates that it currently is not paying tax on materials used in its business.
RULING
Code of Virginia Sec. 58.1-609.5(1) exempts from the sales and use tax professional and personal service transactions which involve sales as inconsequential elements for which no separate charges are made. When determining whether a particular transaction involving both the sale of tangible personal property and the provision of a service represents a sale of tangible personal property or an exempt service, the ``true object' test is used. Title 23 of the Virginia Administrative Code (VAC) 10-210-4040(D) states ``[i]f the object of the transaction is to secure a service and the tangible personal property which is transferred to the customer is not critical to the transaction, then the transaction may constitute an exempt service.'
Based on the above, the Taxpayer is providing a nontaxable service when it charges a fee for applying polyurethane onto truck beds, horse trailers, etc. As a service provider, the Taxpayer is the taxable user and consumer of all of the tangible personal property purchased for use in providing exempt services. See 23 VAC 10-210-4040(E). I note that if a supplier fails to collect the tax from the Taxpayer on its purchases, the Taxpayer must remit use tax to the department as provided in 23 VAC 10-210-6030.
I have enclosed a copy of Public Document 96-318 which reiterates the department's policy regarding this issue. I trust the information provided has addressed your concerns. If you have additional questions or desire to register with the department to remit consumer use tax, please contact ***** in the Office of Tax Policy at *****.
Dear***********:
This will reply to your letter of April 6, 1998, in which you seek a ruling regarding the application of retail sales and use tax to certain transactions for ***** (the Taxpayer).
FACTS
The Taxpayer sprays polyurethane onto truck beds, horse trailers, and any area that requires a waterproof protection. The Taxpayer is requesting a ruling on the application of the tax to polyurethane spray applied to vehicles and other items. The Taxpayer indicates that it currently is not paying tax on materials used in its business.
RULING
Code of Virginia Sec. 58.1-609.5(1) exempts from the sales and use tax professional and personal service transactions which involve sales as inconsequential elements for which no separate charges are made. When determining whether a particular transaction involving both the sale of tangible personal property and the provision of a service represents a sale of tangible personal property or an exempt service, the ``true object' test is used. Title 23 of the Virginia Administrative Code (VAC) 10-210-4040(D) states ``[i]f the object of the transaction is to secure a service and the tangible personal property which is transferred to the customer is not critical to the transaction, then the transaction may constitute an exempt service.'
Based on the above, the Taxpayer is providing a nontaxable service when it charges a fee for applying polyurethane onto truck beds, horse trailers, etc. As a service provider, the Taxpayer is the taxable user and consumer of all of the tangible personal property purchased for use in providing exempt services. See 23 VAC 10-210-4040(E). I note that if a supplier fails to collect the tax from the Taxpayer on its purchases, the Taxpayer must remit use tax to the department as provided in 23 VAC 10-210-6030.
I have enclosed a copy of Public Document 96-318 which reiterates the department's policy regarding this issue. I trust the information provided has addressed your concerns. If you have additional questions or desire to register with the department to remit consumer use tax, please contact ***** in the Office of Tax Policy at *****.
Rulings of the Tax Commissioner