Tax Type
Retail Sales and Use Tax
Description
Retail Sales of Tangible Personal Property;Purchase for Personal Use and Distribution
Topic
Taxability of Persons and Transactions
Date Issued
04-03-1985
April 3, 1985
Dear ****
This is in reply to your letter of December, 1984 in which you submit an application for correction of sales and use tax assessed to * * * as the result of a recent audit.
FACTS
* * * (hereinafter ``Taxpayer') is engaged in the drapery fabrication business and as well, is a distributor of drapery hardware. Taxpayer purchases drapery mounting hardware i.e. traverse rods, end brackets, center supports, tassels or tension pulleys and screws separately and in bulk, rather than in prepackaged units, in order to effect a cost savings. You assert in your application that Taxpayer sells approximately 50% of all drapery hardware to decorators, housing projects, Federal and State government facilities, whereas the remainder is used in drapery installations by Taxpayer. You contest the assessment of sales tax on the purchase of the mounting screws and apply for correction of the assessment.
DETERMINATION
The Virginia Retail Sales and Use Tax is a license or privilege tax that is generally imposed upon every person in the business of making retail sales of tangible personal property. In order to avoid the incidence of multiple sales taxation of the same tangible personal property, an exemption from the imposition of the tax is available to purchasers who purchase tangible personal property for resale.
In the instant case, Taxpayer (based on the information you provided) is reselling only 50% of the mounting screws purchased. The remaining 50% are being consumed in the installation of draperies. The department's policy is clearly expressed in Va. Reg. Sec. 630-10-27, which states:
H. Retailer selling and installing tangible personal property. Any person who sells tangible personal property at retail and installs such property as part of or incidental to the sale is a retailer and is required to add the sales tax to the sales price. The tax does not apply to installation charges when separately statedon a sales invoice. If the installation charge is not separately stated, the tax must be computed on the total charge.
Retailers are deemed to be the users or consumers of all supplies used in installing tangible personal property. Therefore, retailers are subject to the tax on all such supplies purchased. (Emphasis added.)
Based on the information you have provided, the department will revise the assessment to reflect the fact that 50% of the mounting screws purchased are resold separate from installation. In the future the department will require that Taxpayer maintain accurate and verifiable records that show the actual amount of hardware sold, whose sale is not conditional upon installation.
Dear ****
This is in reply to your letter of December, 1984 in which you submit an application for correction of sales and use tax assessed to * * * as the result of a recent audit.
FACTS
* * * (hereinafter ``Taxpayer') is engaged in the drapery fabrication business and as well, is a distributor of drapery hardware. Taxpayer purchases drapery mounting hardware i.e. traverse rods, end brackets, center supports, tassels or tension pulleys and screws separately and in bulk, rather than in prepackaged units, in order to effect a cost savings. You assert in your application that Taxpayer sells approximately 50% of all drapery hardware to decorators, housing projects, Federal and State government facilities, whereas the remainder is used in drapery installations by Taxpayer. You contest the assessment of sales tax on the purchase of the mounting screws and apply for correction of the assessment.
DETERMINATION
The Virginia Retail Sales and Use Tax is a license or privilege tax that is generally imposed upon every person in the business of making retail sales of tangible personal property. In order to avoid the incidence of multiple sales taxation of the same tangible personal property, an exemption from the imposition of the tax is available to purchasers who purchase tangible personal property for resale.
In the instant case, Taxpayer (based on the information you provided) is reselling only 50% of the mounting screws purchased. The remaining 50% are being consumed in the installation of draperies. The department's policy is clearly expressed in Va. Reg. Sec. 630-10-27, which states:
H. Retailer selling and installing tangible personal property. Any person who sells tangible personal property at retail and installs such property as part of or incidental to the sale is a retailer and is required to add the sales tax to the sales price. The tax does not apply to installation charges when separately statedon a sales invoice. If the installation charge is not separately stated, the tax must be computed on the total charge.
Retailers are deemed to be the users or consumers of all supplies used in installing tangible personal property. Therefore, retailers are subject to the tax on all such supplies purchased. (Emphasis added.)
Based on the information you have provided, the department will revise the assessment to reflect the fact that 50% of the mounting screws purchased are resold separate from installation. In the future the department will require that Taxpayer maintain accurate and verifiable records that show the actual amount of hardware sold, whose sale is not conditional upon installation.
Rulings of the Tax Commissioner