Tax Type
Retail Sales and Use Tax
Description
Landscaper invoices
Topic
Collection of Tax
Taxability of Persons and Transactions
Date Issued
06-27-1987
June 27, 1987
Re: Ruling Request/ Sales and Use Tax
Dear ********************
This will reply to your letter of March 20, 1987 seeking information on the correct application of the retail sales and use tax to charges by************** (taxpayer) to construction contractors for landscaping services performed in connection with new real estate construction. Specifically, the taxpayer seeks permission to invoice its customers for plants and shrubs sold and installed by it without having to disclose the exact amount charged for such items sold. The taxpayer claims that requiring it to state the amount charged for such items puts it at a competitive disadvantage with respect to other landscape contractors and sellers of plants and shrubs.
RULING
Section 58.1-603 of the Virginia Code imposes the sales and use tax on the sales price of each item or article of tangible personal property "sold at retail" or distributed in this State. The term "sales price" is defined in §58.1-602(17) as "the total amount for which tangible personal property or services are sold, including any services that are a part of the sale, valued in money, whether paid in money or otherwise, and includes any amount for which credit is given to the purchaser, consumer, or lessee by the dealer, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, losses or any other expenses whatsoever." However, this section continues that "sales price" does not include "... amount separately charged for labor or services rendered in installing, applying, or remodeling or repairing property sold..." (Emphasis added)
In addition, §58.1-602(14) of the Code defines "retail sale" or "sale at retail" for sales and use tax purposes to mean "a sale to any person for any purpose other than for resale in the form of tangible personal property or services taxable under this chapter..
Therefore, the concept of a sale at retail for Virginia sales and use tax purposes is much broader than the traditional meaning of this term which is commonly understood to mean "the sale of commodities or goods in small quantities to ultimate consumers." Webster's New Collegiate Dictionary, 1979 ed.
Based on the foregoing and an examination of sample invoices previously submitted, I find no basis for agreeing to the alternative method suggested by the taxpayer for computing the sales tax due on its transactions with customers. The method suggested does not provide the taxpayer's customers with sufficient information from which to determine how the tax applies to their purchases from the taxpayer.
However, if the taxpayer prefers not to list the exact amount charged for each plant or shrub being sold to its customers in connection with its landscape contracts, it may list in a lump sum the total amount charged for all such items sold and thereby avoid disclosing the exact amount being charged for any particular item. It should be noted further that if the taxpayer continues to compute the tax in the manner shown on the invoices submitted, the total charge for its provision of landscaping services, including charges for transplanting, will remain subject to the tax.
I hope that all of the foregoing has responded to your questions but let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner