Tax Type
Retail Sales and Use Tax
Description
Out-of-state supplier and installer of shower enclosures, bath mirrors, and window screens
Topic
Taxability of Persons and Transactions
Date Issued
12-19-1985
December 19, 1985
Re: §58.1-1821 Application/Sales and Use Tax
Dear ****
This will reply to your letter of June 10, 1985 requesting correction of an assessment issued in the above referenced case for the period April 1, 1979 through November 30, 1984.
Facts
***** (hereinafter "Taxpayer"), is a real estate development company presently engaged in the development of two projects in Northern Virginia. Taxpayer contests the imposition of Virginia use tax on certain property purchased from and installed by an out-of-state dealer, exempt of Virginia sales tax.
The property in question consisted of certain screens, shower enclosures and permanently installed mirrors, for installation in Taxpayer's construction projects.
Determination
§63O-10-27(G) of the Virginia Retail Sales and Use Tax Regulations, provides that a "person selling and installing tangible personal property that becomes real property after installation is generally considered to be a contractor." However, the section continues, "a retailer selling and installing fences, venetian blinds, window shades, awnings, storm windows and doors, floor coverings...cabinets...or other like or comparable items is not classified as a using or consuming contractor with respect to them."
Furthermore, "[p]ersons who are not classified as retailers...and who sell and install fences, venetian blinds, etc., are deemed to be contractors and must pay the sales tax on such items at the time of purchase." Ibid.
In addition, §630-10-27(A) of the regulations provides, "[i]f a supplier of a contractor doing work in Virginia does not collect the Virginia tax from the contractor, the contractor will be liable for the use tax on his purchases from the supplier."
It is the department's understanding that Taxpayer was held liable for the use tax on certain shower enclosures, permanently installed bathroom mirrors, and window screens, which were installed by Taxpayer's out-of-state supplier. Inasmuch as the department has consistently maintained that such shower enclosures and permanently installed mirrors become a part of realty upon installation, Taxpayer should not have been held liable for the use tax on such items. However, since the screens installed in the present case did not lose their identity as tangible personal property upon installation, they were properly held subject to the use tax in the audit.
Therefore, I find basis for correction of the assessment in the present case to remove the value of such shower enclosures and bathroom mirrors. However, the remainder of the assessment is valid as issued.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner