Tax Type
Retail Sales and Use Tax
Description
Transitional provisions; Real estate construction contracts
Topic
Rate of Tax
Date Issued
12-20-1989
December 20, 1989
Re: Request for Ruling/Sales and Use Tax
Dear********************
This will reply to your letter dated August 5, 1987 in which you request a ruling on the application of the one-half cent sales and use tax rate increase transitional provisions to a contract entered into by ****************(the "Taxpayer") and******************.
Virginia Code §58.1-639 provides that refunds of the additional one-half percent increase in the state sales and use tax rate enacted by the 1986 Special Session of the General Assembly paid on or after January 1, 1987 are available on purchases of tangible personal property made pursuant to "bona fide" real estate construction contracts entered into before October 27, 1986 (the date the sales and use tax rate increase was enacted). Based upon the information you have provided, I have concluded that the contract agreed to by the Taxpayer and ***************** Associates was entered into before October 27, 1986 and is subject to the provisions of §58.1-639 of the Code of Virginia.
The term "bona fide contract" is defined in the statute as including "those contracts which are entered into prior to the enactment of the increase in the state sales and use tax rate, provided that such contracts include plans and specification." Emergency Virginia Regulation 630-10-106 further provides the rules that will apply in obtaining refunds of the tax depending on whether or not the contract contains a specific and stated date of completion. The regulation states:
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- In the case of bona fide real estate construction contracts that do not contain specific and stated date of completion, refunds of the addition 1/2% tax may have claimed only with respect to purchased or leased tangible personal property that is delivered to the contractor on or before March 30, 1987. (Emphasis added)
- In the case of bona fide real estate construction contracts that do not contain specific and stated date of completion, refunds of the addition 1/2% tax may have claimed only with respect to purchased or leased tangible personal property that is delivered to the contractor on or before March 30, 1987. (Emphasis added)
Please direct your request for refund with the supporting evidence to: Department of Taxation, office Services Division, Taxpayer Assistance Section, P. O. Box 6-L, Richmond, Virginia 23282.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner