86-207 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Plat reports; Aerial photographs

Topic

Taxability of Persons and Transactions

Date Issued

10-17-1986

October 17, 1986

Re: Request for Ruling/ Sales and Use Tax

Dear **********************

This will reply to your letter of February 6, 1986 seeking a ruling on behalf of *********** (taxpayer) on the correct application of the sales and use tax to taxpayer's business.

FACTS

Taxpayer purchases aerial photographs of specific areas of land for the purpose of enhancing such photographs by computer or by hand into three dimensional plats showing in much greater detail than would otherwise be possible, the topography, i.e., contours, trees, etc.. of such land areas. Taxpayer then combines such topographical data into a one or two page plat report, for use by civil engineering firms in the preparation of a detailed site plan for clients. Taxpayer requests a ruling whether it is required to collect the tax in providing such plat reports to civil engineering firms.

RULING

§58.l-608(2) of the Virginia Code provides an exemption from the sales and use tax for:

- Professional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made.

In addition, §630-10-97.l of the Virginia Retail Sales and Use Tax Regulations provides in pertinent part:

- In order to determine whether a particular transaction which involves both the rendering of a service and the provision of tangible personal property constitutes an exempt service or a taxable retail sale, the "true object" of the transaction must be examined. If the object of the transaction is to secure a service and the tangible personal property which is transferred to the customer is not crucial to the transaction, then the transaction may constitute an exempt service. However, if the object of the transaction is to secure the property which it produces, then the entire charge, including services provided, will be taxable. (Emphasis supplied).

The "true object" sought by the civil engineering firms in the present case, is taxpayer's professional skill and ability in transforming plain photographs into much more usable and detailed three dimensional plats for incorporation into an overall plat report. In addition, the value of the end products produced by taxpayer, i.e, the plat reports themselves, is insignificant in comparison to the value of the service being provided. Accordingly, I find basis for concluding that taxpayer's provision of plat reports to civil engineering firms, represents the provision of a nontaxable service. However, unless otherwise exempt, all of taxpayer's purchases of tangible personal property used in connection with producing such plat reports, including the aerial photographs, will be subject to the tax.

I hope this has answered your questions, but please let me know if you have any further questions.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner