Tax Type
Retail Sales and Use Tax
Description
Calligraphy services
Topic
Exemptions
Date Issued
01-11-1990
January 11, 1990
Re: Ruling Request/ Virginia Sales and Use Tax
Dear************************
This will reply to your letter dated October 31, 1989 in which you request a ruling on the Virginia Sales and Use tax as it applies to calligraphy services.
FACTS
The taxpayer pays sales tax in the normal course of purchasing from its vendors blank stationery. The taxpayer then provides these forms, cards and envelopes for which it has paid tax to a calligraphy service for custom hand-lettering. The calligraphy service includes sales tax on its invoices to the taxpayer. The taxpayer requests a ruling as to whether this type of service is subject to sales tax.
RULING
Virginia Regulation §630-10-37 states that sales and use tax will generally apply to the total charge for the fabrication of tangible personal property on a special order for a consideration, including labor, even if charges for labor are separately stated. Fabrication is any operation which changes the form or state of tangible personal property. The tax applies even to purchasers who furnish, either directly or indirectly, the materials used in the fabrication work.
However, Virginia Regulation §630-10-97.1 states that a "true object" test should be applied in determining whether a particular transaction which involves both the rendering of a service and the provision of tangible personal property constitutes an exempt service or a taxable retail sale.
The hand-lettering services provided by the calligraphy business are similar to those of a word processing or typing service in that the end product is an original document produced according to the customer's specifications. In ruling letters dated September 8, 1988 and August 4, 1986, the department determined that the charge for the production of an original letter by a word processing business was not subject to tax, since the true object of such a transaction was the provision of a personal service and not the sale of tangible personal property.
Based on these prior rulings, the calligraphy represents a nontaxable service. Therefore, the taxpayer may request a refund of the tax previously paid on purchases of calligraphy. It should be noted, however, that the tax does apply when a calligraphy business goes beyond the mere rendition of a service and actually sells tangible personal property at retail. For instance, the sale of blank paper, photocopies, etc., by a calligraphy business would be subject to tax.
I hope the foregoing information has answered your questions. However, please contact the department if you need additional information.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner