Tax Type
Retail Sales and Use Tax
Description
Renderings purchased by architectural firm
Topic
Taxability of Persons and Transactions
Date Issued
11-28-1990
November 28, 1990
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter of May 11, 1990 in which you seek correction of a sales and use tax assessment for ***** (the "Taxpayer").
FACTS
The Taxpayer is an architectural firm. An audit for the period February 1, 1984 through December 31, 1988 produced an assessment for the Taxpayer's failure to remit the sales and use tax on purchases of renderings provided to clients. The Taxpayer contests the assessment of tax on the renderings on the basis that such purchases are used to secure their professional services and are nontaxable as an inconsequential element of the provision of their services as provided in Virginia Regulation (VR) 630-10-97.1.
DETERMINATION
Va. Code §58.1-602 defines a "sale" as:
-
- any transfer of title or possession,...in any manner or by any means whatsoever, of tangible personal property and any rendition of a taxable service for a consideration, and includes the fabrication of tangible personal property for consumers who furnish, either directly or indirectly, the materials used in fabrication.
The furnishing of a rendering constitutes the transfer of tangible personal property which has been fabricated. Thus, the tax is applicable to the purchase of renderings.
VR 630-10-97.1 does provide an exemption for services which involve sales as in consequential elements for which no separate charge is made. A "true object" test is used to determine whether a particular transaction which involves both the rendering of a service and tile provision of property is exempt. In applying tile true object test in this instance, it is determined that the true object sought by the Taxpayer is not a service, but the property produced by the service. Additionally, VR 630-10-82 provides that the tax applies to "sales of photographs, portraits,...blueprints, frames, camera film, etc." (Emphasis added.)
Thus, absent any other statutory exemption, the renderings are taxable. In that the purchase of the renderings were purchases of tangible personal property exclusive of the tax for use or consumption within Virginia, the Taxpayer is subject to the use tax on the entire amount paid to its vendor for such renderings.
Accordingly, I find no basis for correction of the audit assessment. You will shortly receive d bill with interest accrued to date, which should be paid within 30 days to prevent the accrual of additional interest.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner