Tax Type
Retail Sales and Use Tax
Description
Immovable silo structures erected on farms
Topic
Exemptions
Date Issued
03-25-1986
March 25, 1986
Re: Request for Ruling/Sales and Use Tax
Dear ****************
This will reply to your letter of December 17, 1985, in which you submit a request for a ruling on the applicability of the sales and use tax to certain structures used by farmers.
FACTS
********** (Taxpayer) is a contractor engaged in furnishing and erecting ********** structures on farms. The structures are silos consisting of metal sheets that are bolted together and rest on a concrete pad. The structure is attached to the concrete pad by means of anchors set in the concrete to which the bottom row of metal sheets is bolted.
The taxpayer requests a ruling as to the applicability of the sales and use tax to such structures. The taxpayer contends that the structures should be nontaxable as they are movable. The taxpayer notes that its business presently involves the moving of previously erected structures more so than the sale and erection of new ones. In moving a structure, the taxpayer merely unbolts the metal sheets comprising the structure and erects them again on another site, leaving behind only the concrete pad on which the structure rested.
RULING
Section 58.1-608.3 of the Code of Virginia provides an exemption from the sales and use tax for "tangible personal property, except for structural construction materials, necessary for use in agricultural production for market and sold to or purchased by a farmer or contractor to be affixed to real property owned or leased by a farmer." Emphasis added.
Based upon the above statute, materials used in the erection of structures by a farmer or his contractor are subject to the sales and use tax. Section 630-10-4 of the Virginia Retail Sales and Use Tax Regulations sets forth this point, specifically noting that the term "structural construction materials" includes materials used to construct "silos; barns and sheds; storage bins (not portable); greenhouses" and similar structures.
Based upon the foregoing, I must conclude that the structures in question are not exempt from the sales and use tax under the agricultural exemption. The structures, unlike portable storage bins, are fixed in nature and cannot be moved unless completely dismantled. In this respect, the structures are no more mobile than a barn, shed, or greenhouse, which a farmer could conceivably dismantle and move to another site.
Because the structures in question constitute real estate and do not enjoy the agricultural exemption, the taxpayer will continue to be deemed a using or consuming contractor with respect to materials used in the erection or moving of the structures. As such, the taxpayer should continue to pay the tax on all tangible personal property it uses in connection with such contracts.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner