Tax Type
Retail Sales and Use Tax
Description
Determination of Exemption
Topic
Exemptions
Date Issued
05-06-1999
May 6, 1999
Re: Request for Ruling: Retail Sales and Use Tax
Dear*****************
In your letter of March 5, 1999, you request a ruling concerning the application of the resale exemption to a third party drop shipment transaction.
FACTS
***** (the Vendor) is located outside Virginia and registered to collect the Virginia use tax. The Vendor plans on selling electrical wire and cable to ***** (the Purchaser) which asks the Vendor to ship these items to either *********** (the Virginia Customer) located in Virginia or the Purchaser's place of business located in Virginia.
The Purchaser will use the wire and cable to install point-of-sale equipment, i.e., a cash register hooked to a scanner at a checkout line. You indicate that the cash register is readily removable and remains tangible personal property when installed.
The Purchaser is claiming the resale exemption for the purchase of wire and cable and has provided a Virginia resale exemption certificate, Form ST-10, to the Vendor. You ask whether the Vendor may accept the Purchaser's resale exemption certificate in good faith regardless of the shipping destinations noted above.
RULING
The department's longstanding policy is that persons who install tangible personal property are deemed to be the users and consumers of all supplies used in installation. Such persons are therefore subject to the tax on the purchase of all installation supplies. Accordingly, such persons may not claim the resale exemption when purchasing installation supplies for their use. In this regard, see Public Document 85-72 (4/3/85); copy enclosed. Also, see Title 23 of the Virginia Administrative Code (VAC) 10-210-410(H) and 10-210-5040(A); copies enclosed.
As the electrical wire and cable in the instant case will be used by the Purchaser to install a cash register, these installation materials are taxable to the Purchaser at the time of purchase. Accordingly, the resale exemption is not applicable in this instance, and the Vendor is required to collect the sales tax on the transaction.
If you have any questions about this response, please contact ***** of my tax policy staff at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21608R
Rulings of the Tax Commissioner