Tax Type
Retail Sales and Use Tax
Description
Construction; Nonprofits; private schools and churches; Church windows
Topic
Collection of Tax
Taxability of Persons and Transactions
Date Issued
10-13-1999
October 13, 1999
Dear***
This will reply to your letter in which you seek correction of retail sales and use tax audit assessments issued to ***** (the ``Taxpayer') for the periods September 1992 through December 1995, March 1996 through December 1996, and January 1997 through March 1998. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer sells and installs stained glass windows. The Taxpayer's customers typically are churches or contractors performing real property construction jobs for churches. The Taxpayer was audited by the department and treated as a retailer. Sales tax was assessed on the Taxpayer's sales of stained glass windows. The Taxpayer believes the sales to nonprofit churches are not taxable.
DETERMINATION
Code of Virginia Sec. 58.1-609.8(2) provides an exemption from the sales and use tax for purchases of tangible personal property by a nonprofit church used in carrying out the work of the church and its related ministries. The exemption does not apply to property used outside the public church building, property affixed to realty, and property used in recording and reproducing religious worship services. Title 23 of the Virginia Administrative Code (VAC) 10-210-310, copy enclosed, further interprets the exemption and provides that tangible personal property that is affixed to or that becomes a part of real estate is taxable to churches. In subsection D of the regulation, stained glass windows which become a part of real estate are included in the list of taxable items.
Based on the information presented, the Taxpayer sells and installs stained glass windows. In such instances, the Taxpayer is acting as a real property contractor, as the windows are incorporated into real property and lose their identity as tangible personal property when installed. As a contractor, the Taxpayer is required to pay sales tax or accrue use tax on all purchases of stained glass windows, materials and supplies used in the performance of the contract work. Sales tax is not collected from customers on real property contract work. See 23 VAC 10-210-410.
I understand that the Taxpayer has paid sales tax on purchases of tangible personal property used to perform its contracts for the sale and installation of the stained glass windows during the audit periods. The assessments were based on the premise that the Taxpayer was a retailer making untaxed retail sales. For this reason, the assessments will be abated in full.
Please note that if the Taxpayer makes sales of stained glass windows to churches or other customers and the Taxpayer does not install the windows, the sales are taxable retail sales. The Taxpayer should collect sales tax from the customer on these sales.
If you have any questions, please contact ***** in the Office of Tax Policy at *****.
Dear***
This will reply to your letter in which you seek correction of retail sales and use tax audit assessments issued to ***** (the ``Taxpayer') for the periods September 1992 through December 1995, March 1996 through December 1996, and January 1997 through March 1998. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer sells and installs stained glass windows. The Taxpayer's customers typically are churches or contractors performing real property construction jobs for churches. The Taxpayer was audited by the department and treated as a retailer. Sales tax was assessed on the Taxpayer's sales of stained glass windows. The Taxpayer believes the sales to nonprofit churches are not taxable.
DETERMINATION
Code of Virginia Sec. 58.1-609.8(2) provides an exemption from the sales and use tax for purchases of tangible personal property by a nonprofit church used in carrying out the work of the church and its related ministries. The exemption does not apply to property used outside the public church building, property affixed to realty, and property used in recording and reproducing religious worship services. Title 23 of the Virginia Administrative Code (VAC) 10-210-310, copy enclosed, further interprets the exemption and provides that tangible personal property that is affixed to or that becomes a part of real estate is taxable to churches. In subsection D of the regulation, stained glass windows which become a part of real estate are included in the list of taxable items.
Based on the information presented, the Taxpayer sells and installs stained glass windows. In such instances, the Taxpayer is acting as a real property contractor, as the windows are incorporated into real property and lose their identity as tangible personal property when installed. As a contractor, the Taxpayer is required to pay sales tax or accrue use tax on all purchases of stained glass windows, materials and supplies used in the performance of the contract work. Sales tax is not collected from customers on real property contract work. See 23 VAC 10-210-410.
I understand that the Taxpayer has paid sales tax on purchases of tangible personal property used to perform its contracts for the sale and installation of the stained glass windows during the audit periods. The assessments were based on the premise that the Taxpayer was a retailer making untaxed retail sales. For this reason, the assessments will be abated in full.
Please note that if the Taxpayer makes sales of stained glass windows to churches or other customers and the Taxpayer does not install the windows, the sales are taxable retail sales. The Taxpayer should collect sales tax from the customer on these sales.
If you have any questions, please contact ***** in the Office of Tax Policy at *****.
Rulings of the Tax Commissioner