Tax Type
Retail Sales and Use Tax
Description
Fencing, venetian blinds and draperies installed by a retailer
Topic
Collection of Tax
Date Issued
01-15-1987
January 15, 1987
Re: §58.1-1821 Application/Sales and Use Tax
Dear********************
This will reply to your letter of August 13, 1986, in which you submit an application for correction of sales and use tax assessed to************** as the result of a recent audit.
FACTS
*************** (Taxpayer) as part of a governmental contract arranged for the furnishing and installation of fencing, venetian blinds, and draperies and tracks by other firms. Considering the other firms to be acting as contractors respecting real estate, the taxpayer did not remit the sales and use tax on the items furnished and installed by the firms. As the result of a recent audit, however, the taxpayer was assessed the tax on such items. In addition, the taxpayer was assessed tax on the price of a cooler purchased and installed by a subcontractor.
The taxpayer contests the above assessment, contending that the articles furnished and installed by others became a permanent part of real estate. As such, the taxpayer feels the installers should be deemed contractors respecting real estate and not retailers required to collect the sales tax.
DETERMINATION
In general, §58.1-610.A of the Code of Virginia provides that any person who contracts to perform installation or any other service with respect to real estate is deemed to be the taxable user or consumer of any property furnished in connection with the work. As such, the contractor or subcontractor performing the installation work does not collect the sales tax from his customer. However, subsection D of §58.1-610 sets forth an exception to this general rule:
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- Any person selling fences, venetian blinds, window shades awnings, storm windows and doors, floor coverings (as distinguished from the floors themselves), cabinets, kitchen equipment, window air conditioning units or other like or comparable items, shall be deemed to be a retailer of such items and not a using or consuming contractor with respect to them, whether he sells to and installs such items for contractors or other customers and whether or not such retailer fabricates such items. Emphasis added
- Any person selling fences, venetian blinds, window shades awnings, storm windows and doors, floor coverings (as distinguished from the floors themselves), cabinets, kitchen equipment, window air conditioning units or other like or comparable items, shall be deemed to be a retailer of such items and not a using or consuming contractor with respect to them, whether he sells to and installs such items for contractors or other customers and whether or not such retailer fabricates such items. Emphasis added
As to the cooler included in the department's audit, it is my understanding that this was purchased by another contractor and affixed to real estate by that contractor. However, the taxpayer paid the purchase invoice for the cooler as the other contractor was financially unable to do so. As the taxpayer was not the party to affix the cooler to real estate, the only grounds for the assessment of tax in this instance would be if the taxpayer's credit was bound when the cooler was ordered by the other contractor. Possessing no evidence to support such a finding, I must conclude that the tax on the cooler is not the responsibility of the taxpayer. Rather, the other contractor as the ultimate consumer is responsible for the tax. The department's audit will be revised as soon as practicable to delete the cooler installation transaction and a revised notice of assessment will be issued to the taxpayer accordingly.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner