Bulletin Number
VTB 92-7
Tax Type
Retail Sales and Use Tax
Description
Sale and Installation of Floor Coverings
Topic
Property Subject to Tax
Date Issued
09-15-1992
SALE AND INSTALLATION OF FLOOR COVERINGS
The purpose of this Tax Bulletin is to alert floor covering dealers as to the proper application of the retail sales and use tax to the sale and installation of floor coverings.
DEFINITION OF FLOOR COVERINGS. The term "floor coverings," as distinguished from floors themselves, is defined in Virginia Regulation (VR) 630-10-27G as including rugs, mats, padding, wall-to-wall carpets when installed by the tack strip or stretch-in methods, and other floor coverings which are not glued, cemented, or otherwise permanently attached to the floor below. However, any floor covering which is glued, cemented, or otherwise permanently attached to the floor below is deemed to be a "floor."
SALE AND INSTALLATION OF FLOOR COVERINGS AND FLOORS. A retailer, any person who maintains a retail or wholesale place of business, an inventory of floor coverings and/or materials which enter into or become a component part of such, and who performs installation as part of or incidental to the sale of such items, must collect the tax on its sales of floor coverings. However, installation charges are nontaxable provided they are separately stated on a sales invoice.
Installations of floors are always considered contract work and the seller/installer is treated as a contractor. Therefore, a retailer is deemed to be a using and consuming contractor with respect to installations of floors, including floor coverings which become permanently attached. For such installations, he must pay the tax on the cost price of the floor.
Persons who are not classified as retailers as set forth above and who sell and install floors and floor coverings are deemed to be contractors, regardless of whether the floor coverings remain tangible personal property or are permanently attached to the floors. Contractors are required to pay the tax on their purchases at the time of purchase or remit the tax directly to the department.
However, uninstalled sales of floor coverings are always retail sales, even if the seller is normally a contractor, and the seller must collect and remit the tax on its sales.
SALES TO NONPROFIT ORGANIZATIONS. The tax does not apply to sales to governmental entities and certain nonprofit organizations when the applicable exemption certificate is obtained. However, persons selling and installing floors and floor coverings which become permanently attached to floors to governmental entities and nonprofit organizations are deemed contractors and must pay use tax on the cost price of items used in performing contract work, including the floors and floor coverings, even if furnished an exemption certificate.
FOR ADDITIONAL INFORMATION. Questions may be directed to the Department of Taxation, Office of Taxpayer Services, P. O. Box 1880, Richmond, Virginia 23282-1880, (804) 367-8037.
Tax Bulletins