During the 2017 Session, the Virginia General Assembly enacted House Bill 1890 and Senate Bill 1308 (2017 Acts of Assembly, Chapters 436 and 449) which, effective July 1, 2017, change the Retail Sales and Use Tax treatment of sales of certain tangible personal property that is affixed by the seller to real property.
The legislation repeals part of Va. Code § 58.1-610(D), the Retail Sales and Use Tax provision requiring dealers that both make retail sales and also install fences, venetian blinds, window shades, awnings, storm windows and doors, locks and locking devices, floor coverings, cabinets, countertops, kitchen equipment, window air conditioning units or other like or comparable items to collect the tax from their customers on such sales. In the same manner as other real property contractors, these retailers will now be required to pay the tax on their purchase or use of these items.
Prior to the legislation, any person selling and installing these items would be deemed a retailer of them and not a using or consuming contractor with respect to them. Accordingly, such dealers would be able to purchase the goods for resale tax exempt and then collect sales tax from the ultimate consumer. Real property contractors were deemed to be consumers of these items and were required to pay sales or use tax on them and not charge tax to the ultimate consumers.
Since the legislation represents a change in long-standing policy, the Department of Taxation will issue a guidance document to facilitate understanding of and compliance with the new legislation.
To increase government transparency and facilitate the development process, the Department solicited comments regarding the development of the bulletin. Interested parties were given a 14 day period to comment on the draft of the bulletin.
The law change is effective July 1, 2017.
House Bill 1890 (2017)
- HB 1890 Text as passed the House and Senate
- HB 1890 PDF of text as passed the House and Senate (PDF)
- HB 1890 Fiscal Impact Statement
Senate Bill 1308 (2017)
- SB 1308 Text as passed the House and Senate
- SB 1308 PDF of text as passed the House and Senate (PDF)
- SB 1308 Fiscal Impact Statement