Tax Type
Retail Sales and Use Tax
Description
Contractors; On-ground swimming pools
Topic
Taxability of Persons and Transactions
Date Issued
04-12-1990
April 12, 1990
Re: Request for Ruling/ Sales and Use Tax
Dear************************
Thank you for your letter of February 15, 1990, requesting a ruling on behalf of your client, **************on the application of the sales and use tax to certain swimming pools and for your March 13, 1990, letter supplying additional information on the pools.
Facts
***************("the Taxpayer") is engaged in the sale and installation of large on-ground swimming pools (as differentiated from above ground swimming pools). The swimming pools range in size from 12'x 2O'x 4' to 2O'x 42'x lO', are equipped with underground drainage, and set 2' to 4' underground at the deep end. The pools are fixed in nature, are not "seasonal", nor dismantled for any part of the year, and cannot be moved without substantial material damage to the underlying realty. Each pool, whose cost equals or exceeds the cost of a comparably sized inground swimming pool, has a useful life in excess of 30 years.
You request a ruling that the Taxpayer is a using and consuming contractor pursuant to Virginia Code §58.1-610(A) and Virginia Regulation 630-10-27 and that the installation by the Taxpayer of the pools constitutes an improvement to real property to which the sales and use tax does not apply.
Ruling
§58.1-610 of the Code of Virginia provides that "[a]ny person who contracts...to perform construction, reconstruction, installation, repair, or any other service with respect to real estate or fixtures thereon, and in connection therewith to furnish tangible personal property, shall be deemed to have purchased such tangible personal property for use or consumption."
Consistent with the foregoing, §A of Virginia Regulation 630-10-27 provides that "[t]angible personal property incorporated in real property construction which loses its identity as tangible personal property and becomes real property is deemed to be tangible personal property used or consumed by the contractor."
Additionally, the Virginia Supreme Court decision in Transcontinental Gas Pipe Line v. Prince William County, 210 Va. 550 (1970) sets forth the primary tests for determining whether property is tangible or real.
Applying the facts in this case to the authorities cited above, I find that the installed swimming pools in question constitute an improvement to realty and that the Taxpayer is a using or consuming contractor for purposes of the Virginia retail sales and use tax. As such, the Taxpayer pays the tax when purchasing the tangible personal property and does not pass the tax on to its customer as a tax. Rather, the Taxpayer will take the tax into consideration when setting its fees to customers. If the Taxpayer's suppliers are not authorized to collect the Virginia tax or fail to collect the tax, the Taxpayer must remit the tax directly to the department on Form ST-7, Consumer's Use Tax Return.
The only exception to this general rule would be if the Taxpayer sells a pool to a customer or another contractor on an uninstalled basis. In such cases, the Taxpayer must collect the tax from the purchaser based on the full sales price of the pool, excluding separately stated transportation charges.
I hope this has answered your questions; however, please contact the department if you have additional questions or if we may be of any further assistance.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner