Tax Type
Retail Sales and Use Tax
Description
Landscape contracts; Provision of trees, flowers, shrubs, etc.
Topic
Collection of Tax
Taxability of Persons and Transactions
Date Issued
11-24-1987
November 24, 1987
Re: §58.1-1821 Application/
Sales and Use Tax/
Dear ****************
This will reply to your letter of July 17, 1987 on behalf of ****************** (taxpayer) seeking correction of an assessment issued by the department in the above referenced case for the period June 1982 through December 1986. This also has reference to a ruling previously issued by the department to the taxpayer, dated April 21, 1987, and to invoices and other information remitted by the taxpayer to a member of my staff on October 27, 1987.
FACTS
The taxpayer was audited and held liable for failing to charge the tax in connection with its provision of plants, trees, shrubs, etc,, under landscape contracts for real estate developers. The taxpayer seeks correction of the assessment, contending that it was a using and consuming contractor and not a retailer of such items, as held in the audit. In the alternative, if the department finds that it was a retailer of such plants, trees and shrubs, the taxpayer seeks a credit against the assessment for the tax paid on its purchases of such items. The taxpayer has remitted purchase invoices and other documentation in support of this request.
In addition, the taxpayer seeks correction of the assessment for separately invoiced amounts for mulch provided to customers in connection with periodic grounds maintenance contracts. Lastly, the taxpayer contests the application of the tax to two specific invoices for mulch, one of which it contends was picked up twice by the auditor and the other of which it contends includes a charge for periodic grounds maintenance.
DETERMINATION
For the reasons given in the April 21 ruling referenced above, (copy attached), I find no basis for treating the taxpayer as a using and consuming contractor of the plants, trees, shrubs, etc., purchased from suppliers for transplanting by the taxpayer in real estate developments. However, based on the supplier invoices and other documentation recently provided. the audit will be adjusted to allow a credit for the tax paid on the taxpayer's purchases of plants, trees and shrubs, which were later resold and included in the audit assessment.
In addition, I see no basis for correction of the assessment on the amounts separately invoiced by the taxpayer for mulch. While the taxpayer's grounds maintenance contracts provided customers with the option of purchasing mulch at various intervals during the growing season and at specified prices, the charge for the mulch was never included in the taxpayer's basic charge for providing grounds maintenance. Rather, as shown by the contracts and invoices remitted, when a customer elected to purchase mulch, a separate invoice was generated by the taxpayer, usually based on a specific amount per cubic yard of mulch provided. Accordingly, the auditor correctly held the taxpayer liable for failing to charge the tax in making sales of mulch.
However, the audit will be adjusted to remove the invoice for ***** which was erroneously picked up twice by the auditor, and for that portion of the amount invoiced on October 16, 1986 which represented a charge for periodic grounds maintenance.
Based on the foregoing, once the audit adjustments are completed, the assessment will be reissued to the taxpayer and be due and payable upon receipt.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner