Tax Type
Retail Sales and Use Tax
Description
Computer purchase by government contractor
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
08-19-1993
August 19, 1993
Re: §58.1-1821 Application: Retail Sales & Use Tax
Dear***********
This will reply to your letter of April 15, 1993, in which you seek reconsideration with respect to certain items in the department's March 4, 1993 determination to your company,**************(the "Taxpayer").
A telephone conversation between **********of your company and a member of my Tax Policy staff revealed that you no longer contest Item B-5.
Based upon the additional information provided, I will agree to remove from the assessment Items B-4, B-10, C-18 and C-21. However, the other items will remain taxable for the reasons set forth below.
B-6. Computer Equipment
The Taxpayer was directed to purchase certain computer equipment by the federal government in connection with a service contract. Since the federal government specifically requested such equipment and since the modification to the original contract directing the Taxpayer to make the purchase was made 1 1/2 years after the issuance of the original contract, the Taxpayer maintains that such equipment could have been purchased exempt from the tax since it was for resale to the federal government.
Consistent with P.D. 89-154 (4/28/89), copy enclosed, and based on the information provided, I cannot agree with the Taxpayer's conclusion and find that the equipment was properly held taxable in the assessment.
C-20. Replacement Computers
While these computers may have been used 90% of the time in the development of the Systems contract, from the information provided, it does not appear that title to such passed to the federal government nor was the equipment used directly and exclusively in research and development. As such, these items were properly held taxable in the audit.
Accordingly, the assessment will be revised as set forth above and the Taxpayer will receive a revised Notice of Assessment shortly. Since the issues at hand have been reviewed repeatedly, the department will not consider any further requests for reconsideration with respect to the remaining issues in this audit assessment unless you are able to provide new information pertinent to those issues.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6947H
Rulings of the Tax Commissioner