Tax Type
Retail Sales and Use Tax
Description
Swimming pool installations
Topic
Taxability of Persons and Transactions
Date Issued
09-26-1985
September 26, 1985
Re: Virginia Code Section 58.1-1821 Application
Dear ****
This is in reply to your letter of June 5, 1985 in which you apply for correction of the assessment of sales and use tax which resulted from a recent audit of *****.
FACTS
***** (Taxpayer) is a retailer of flowers, plants, shrubbery, nursery stock, etc. During 1982 Taxpayer was also engaged in the business of selling and installing swimming pools. The only area of the recent audit that you contest is the portion involving the swimming pool business.
Taxpayer's records indicate that they purchased 15 pool kits, of which 13 were later installed. You contend that the two remaining pool kits were returned to the out of state supplier for a credit. The department has held you liable for use tax on all 15 kits, since you were unable to substantiate the return of the two kits.
Taxpayer also kept a display of pool supplies in the showroom. You contend that some of these supplies were sold over the counter and some were used in the installation of the pools. You were unable to furnish documentation showing what portion of these supplies were sold at retail, on which you would have collected sales tax, and which portion was consumed in the installation of the pools. The department assessed use tax on the entire amount of supplies.
You only contest the portion of the department's assessment that relates to these two items. You ask that the department allow you credit for the two pool kits allegedly returned and for 50% of the pool supplies.
You suggest that 50% would be a reasonable allocation between the amount of supplies used in the installation of the pools and the amount of supplies sold at retail.
DETERMINATION
Under Virginia Code Section 58.1-610 and the corresponding Virginia Retail Sales and Use Tax Regulation, §630-10-27, Taxpayer is the consuming contractor in regard to any tangible personal property purchased for the pool installation operation. As such, Taxpayer was liable for the sales tax at the time the pool kits were purchased. Absent the payment of the sales tax to the supplier, Taxpayer was required to remit use tax on such purchases. Likewise, any pool supplies purchased and used in the installation of the pools would be taxable to Taxpayer at the time of purchase. Only supplies purchased by Taxpayer and resold, exclusive of the pool installation, would qualify to be purchased under a resale exemption certificate.
Virginia Code Section 58.1-633 requires that:
Absent any documentation to support your contention that two pool kits were returned to the supplier and that sales tax was collected on 5O% of the pool supplies, we have no choice but to deny your application for correction of the assessment.
Sincerely,
W. H. Forst
Tax Commissioner
Re: Virginia Code Section 58.1-1821 Application
-
- Sales and Use Tax
Dear ****
This is in reply to your letter of June 5, 1985 in which you apply for correction of the assessment of sales and use tax which resulted from a recent audit of *****.
FACTS
***** (Taxpayer) is a retailer of flowers, plants, shrubbery, nursery stock, etc. During 1982 Taxpayer was also engaged in the business of selling and installing swimming pools. The only area of the recent audit that you contest is the portion involving the swimming pool business.
Taxpayer's records indicate that they purchased 15 pool kits, of which 13 were later installed. You contend that the two remaining pool kits were returned to the out of state supplier for a credit. The department has held you liable for use tax on all 15 kits, since you were unable to substantiate the return of the two kits.
Taxpayer also kept a display of pool supplies in the showroom. You contend that some of these supplies were sold over the counter and some were used in the installation of the pools. You were unable to furnish documentation showing what portion of these supplies were sold at retail, on which you would have collected sales tax, and which portion was consumed in the installation of the pools. The department assessed use tax on the entire amount of supplies.
You only contest the portion of the department's assessment that relates to these two items. You ask that the department allow you credit for the two pool kits allegedly returned and for 50% of the pool supplies.
You suggest that 50% would be a reasonable allocation between the amount of supplies used in the installation of the pools and the amount of supplies sold at retail.
DETERMINATION
Under Virginia Code Section 58.1-610 and the corresponding Virginia Retail Sales and Use Tax Regulation, §630-10-27, Taxpayer is the consuming contractor in regard to any tangible personal property purchased for the pool installation operation. As such, Taxpayer was liable for the sales tax at the time the pool kits were purchased. Absent the payment of the sales tax to the supplier, Taxpayer was required to remit use tax on such purchases. Likewise, any pool supplies purchased and used in the installation of the pools would be taxable to Taxpayer at the time of purchase. Only supplies purchased by Taxpayer and resold, exclusive of the pool installation, would qualify to be purchased under a resale exemption certificate.
Virginia Code Section 58.1-633 requires that:
-
- A. Every dealer required to make a return and pay or collect any tax under this chapter shall keep and preserve suitable records of the sales, leases, or purchases, as the case may be, taxable under this chapter, and such other books of account as may be necessary to determine the amount of tax due hereunder, and such other pertinent information as may be required by the Tax Commissioner. (Emphasis added.)
Absent any documentation to support your contention that two pool kits were returned to the supplier and that sales tax was collected on 5O% of the pool supplies, we have no choice but to deny your application for correction of the assessment.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner