Tax Type
Retail Sales and Use Tax
Description
Contractor invoices
Topic
Returns/Payments/Records
Date Issued
05-22-1989
May 22, 1989
Re: Request For Ruling. Sales and Use Tax
Dear***************
This will reply to your letter dated December 27, l 988, in which you requested a ruling on the correct method of billing procedures for your client, ************ ("The Taxpayer").
FACTS
The Taxpayer is a general contractor and regularly requests competing price quotes from vendors and subcontractors for substantially all products related to its construction projects. Each request for quotation indicates that the submitted price quote is to include applicable state sales taxes. As a result of a recent audit, the Taxpayer was advised that the form used for billing purposes by the vendors and subcontractors was not acceptable since it did not include a separate statement of material costs and sales tax. The Taxpayer submits a copy of their revised billing statement ("the billing statement) asking whether the format will meet technical requirements for separate statement of material costs and related sales tax and whether they may use the billing statement in lieu of an invoice. The Taxpayer's revised billing statement provides that "the undersigned guarantees that included in line 1 above [contract amount] is $******** sales tax on material cost of $****** that is being collected and will be remitted to Virginia in accordance with applicable sales tax laws."
RULING
§58. l -625(1 ) of the Code of Virginia states that "[t]he tax levied by this chapter [the sales and use tax] shall be paid by the dealer, but the dealer shall separately state the amount of the tax and add such tax to the sales price or charge." (Emphasis added). While the proposed billing statement does provide for the separate statement of the tax. it does not provide an accurate accounting of the Taxpayer's taxable purchases. The billing statement bases the tax on material costs; however, §58.1-603 of the Code of Virginia requires that the tax be computed based on the sales price of the property sold. The term "sales price" is defined in §58.1-603(17) of the Code of Virginia as:
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- [T]he total amount for which tangible personal property or services are sold, including any services that are a part of the sale...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. (Emphasis added).
- [T]he total amount for which tangible personal property or services are sold, including any services that are a part of the sale...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. (Emphasis added).
Based on the foregoing, I do not find the Taxpayer's revised billing statement to accurately reflect its taxable purchases and the amount of tax due thereon. Notwithstanding this, the department remains willing to explore other alternatives with the Taxpayer, provided that sufficient information is available to determine the goods purchased by the Taxpayer, the total price paid for those goods, the date of purchase, and the amount of tax paid to the Taxpayer's vendors on the transactions (see VR 630-10-30. copy enclosed).
If you have any further questions, please contact us.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner