Tax Type
Retail Sales and Use Tax
Description
Services; Repair and installation; Mail-order shoe repairs
Topic
Taxability of Persons and Transactions
Date Issued
11-22-1994
November 22, 1994
Re: §58.1-1821 Application: Sales and Use Tax
Dear*************
This will reply to your letter of December 15, 1992 in which you seek correction of the sales and use tax audit of**************(the "Taxpayer") for the period of July, 1989 through June, 1991.
FACTS
The Taxpayer is engaged in the business of mail order shoe repair. Due to the nature of the Taxpayer's business, the Taxpayer has exclusive agreements with two major international shoe makers to provide factory authorized repairs for the entire North American Continent using only original materials. The Taxpayer has operated and relied on the provisions of Virginia Regulation (VR) 630-10-90 (Repair businesses) and objects to the! existence of VR 630-10-99 (Shoes, leather, jewelry and like repairmen, copy enclosed). The Taxpayer feels that due to the unique nature of their repair business, VR 630-10-90 more appropriately applies to the operations. The Taxpayer is requesting abatement of the audit liability in it's entirety or that an offer in compromise be entertained.
DETERMINATION
VR 630-10-99 differentiates shoe repair from other repair businesses based on the fact that unlike traditional repair businesses, materials used in shoe repair tend to be incidental to the actual repair service. The regulation also provides uniform treatment of all shoe repair businesses.
Based on information provided by the auditor, the Taxpayer charges its Virginia customers a flat $3.00 charge for materials on all repairs. This would appear to indicate that the cost of materials charged to the Taxpayer's customer is an incidental part of the total repair transaction, as is the case with other shoe repair businesses. While I realize the Taxpayer's operation may be unique in nature and does not fit the traditional mold of a conventional shoe repair facility (having a larger number of employees than most shoe repair businesses and dealing with customers primarily by mail-order), in most respects it appears to be providing the same types of service as smaller shoe repair operations.
I also recognize the Taxpayer's concern over paying tax on materials that will be shipped to out-of-state customers. However, shoe repair businesses, like other service providers (real estate construction contractors, government contractors, advertising agencies, and professional such as attorneys) are required to pay tax on all materials used in providing their services regardless that the materials may ultimately go to customers outside Virginia.
Based upon the foregoing, the department does not find basis for treating the Taxpayer differently from other shoe repair businesses.
If you should have any further questions, please feel free to contact the department.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/8025K
Rulings of the Tax Commissioner