Tax Type
Retail Sales and Use Tax
Description
Out-of-state contractor; Virginia job site
Topic
Taxability of Persons and Transactions
Date Issued
04-06-1988
April 6, 1988
Re: Ruling Request/ Sales and Use Tax
Dear*********************
This will reply to your letter of October 20, 1987 seeking a ruling on the correct application of Virginia sales and use tax to various transactions involving your client, (taxpayer) a Virginia based general contractor which also operates and performs alterations to real estate in Maryland and the District of Columbia (D.C.). We apologize for the delay in providing you with this response. This will respond to your questions in the order presented.
Your first two questions concern purchases by the taxpayer of items from a D.C. vendor, for use only in D.C. jobs. You have correctly indicated that no tax would be due to Virginia on such purchases, assuming the taxpayer never takes delivery or possession of the items in Virginia.
Question three concerns items purchased from a D.C. vendor for delivery by the vendor to a Virginia job site for use and consumption at the Virginia site. You are correct in indicating that Virginia use tax would be due on such purchases. If the D.C. vendor was registered to collect Virginia sales tax, taxpayer could instead have paid Virginia sales tax on such items
Your fourth question concerns items purchased from a Virginia vendor for use and consumption on a job in D.C. The department expresses no opinion as to any credit which might be allowed against D.C.'s use tax for sales tax properly payable to Virginia on such items.
Question five concerns items purchased by the taxpayer from a Virginia vendor for direct delivery to a D.C. job site by the vendor with no use or storage of the items occurring in Virginia. No Virginia sales tax would be due on such items, and the department expresses no opinion as to whether they would be taxable in D.C.
Questions six and seven concern purchases by the taxpayer of items from a Maryland vendor, picked up by the taxpayer in Maryland, on which Maryland sales tax is paid, for use and consumption at D.C. job sites. No Virginia sales tax would be due on such purchases provided they are not brought into Virginia by the taxpayer prior to their consumption in D.C. The department expresses no opinion as to any credit which might be allowed against D.C.'s use tax for sales tax paid to Maryland on such items.
Question eight concerns items purchased from a Maryland vendor for delivery to Virginia, on which no Maryland sales tax is charged, for consumption at Virginia job sites. Your letter correctly indicates that Virginia use tax would be due on such items.
Question nine concerns purchases by the taxpayer of items from a Maryland vendor, for which delivery is taken in Maryland, and on which Maryland sales tax is paid, for temporary storage in Virginia and subsequent consumption at D.C. job sites. In general, the taxpayer will be required to file a Virginia use tax return for such items, but will be allowed a credit, not to exceed the amount of the use tax (currently at the rate of 4.5%) for tax paid to the state of Maryland. However, as indicated in subsection (I) of enclosed VR 630-10-27, an exemption from Virginia's sales and use tax currently exists for purchases of construction materials for temporary storage in Virginia to be used in exempt construction projects in other states. For example, if the materials purchased in this example, were for temporary storage in Virginia and subsequent use in an exempt D.C. construction project, Virginia use tax would not be due on such purchases.
Your last question concerns items purchased by the taxpayer from a Virginia vendor, with delivery occurring in Virginia, for subsequent use at Maryland job sites. You have correctly indicated that Virginia sales tax would be due on such purchases, and the department expresses no opinion as to any credit against Maryland's use tax which might be granted for sales tax paid to Virginia.
For your further reference, we have enclosed a copy of VR 630-10-27, governing real estate construction contractors. I hope that the foregoing has responded to your questions, but let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner