Rulings of the Tax Commissioner
Document Number: 99-45
Tax Type:Retail Sales and Use Tax
Brief Description:Temporary storage of construction materials
Topics:Property Subject to Tax
Date Issued:03/31/1999
March 31, 1999

Re: 58.1-1821 Application: Retail Sales and Use Tax

Dear *****************

This will reply to your letter in which you seek correction of a sales and use tax assessment issued to ***** (the Taxpayer) for the period November 1992 through February 1998. I apologize for the delay in responding to your appeal.


The Taxpayer is a property management company located outside Virginia. The Taxpayer manages residential and commercial properties both within and outside Virginia. As a result of the department's audit, an assessment was made for untaxed purchases of fixed assets used in remodeling properties. At issue is the purchase of cabinets, fixtures, carpet, and other similar items shipped to Virginia for temporary storage to be incorporated into real property in another state. In addition, the Taxpayer takes issue to the application of tax to blueprints.


Temporary Storage

Title 23 of the Virginia Administrative Code (VAC) 10-210-410(A) sets out the basic rules regarding the application of the sales and use tax to contractors with respect to real estate and provides, in Part, that: Code of Virginia 58.1-609.3(1) exempts from the sales and use tax purchases of construction materials temporarily stored in Virginia by a contractor which are to be used solely outside Virginia in an exempt construction project. Title 23 of the Virginia Administrative Code (VAC) 10-210-410(1) further provides that the exemption is restricted to construction materials that are to be incorporated into exempt real property construction and could be purchased tax free by the contractor in the other states.

In this case, the Taxpayer purchased tangible personal property from suppliers which delivered the materials directly to Virginia for temporary storage. While the materials were subsequently used in real property construction projects in another state, the Taxpayer has provided no documentation to indicate that the materials were used in exempt construction projects and could have been purchased tax free by the Taxpayer in the other state. As such, the Taxpayer is deemed the using and consuming contractor of the materials and is subject to the tax in accordance with Title 23 VAC 10-210-410. Accordingly, I find the purchases were properly included in the department's audit.


Title 23 VAC 10-210-2050 provides that [T]he tax applies to sales of photographs, portraits, prints, slides from camera film, photostats, blueprints, frames, camera film, etc....'' However, Title 23 VAC 10-210-4040 provides an exemption for services which involve sales as inconsequential elements for which no separate charge is made. Thus, the purchase of blueprints is incidental in nature when sold in connection with architectural design work or other professional service transactions and is not subject to sales tax. However, charges for blueprints without the provision of professional services are subject to sales tax.

Effective July 1, 1997 through June 30, 1999, a professional's provision of original, revised, edited, reformatted or copied documents to its client or to third parties in the course of the professional's rendition of services to its clientele are exempt from the tax under Code of Virginia 58.1-609.10(15).

From the information provided, it appears that the Taxpayer purchased copies of blueprints from a professional blueprinting firm which were delivered directly to Virginia. In accordance with Title 23 VAC 10-210-6030 (A), copy enclosed, the use of tangible personal property in Virginia constitutes a taxable event. As such, I find that the auditor correctly applied the tax to the blueprints for the period November 1992 through June 1997. However, charges for blueprints for the period July 1997 through February 1998 will be removed from the audit in accordance with Code of Virginia 58.1-609.10(15). If the Taxpayer can provide documentation that any of the charges were for blueprinting services only for the period prior to July 1, 1997, those items will be removed from the audit.

Based on the information provided, I find that the auditor correctly assessed the tax on the purchase of blueprints for the period prior to July 1, 1997. While the Taxpayer indicates that it has paid the tax on the purchase of blueprints to another state, the Taxpayer's remedy is to seek a refund from the taxing authority of the other state based on the use tax paid in Virginia.


The audit will be revised according to the determination in this case. The Taxpayer will receive an updated bill with interest accrued through the date of the letter of protest. While you had requested a meeting regarding the contested issues, the department's established policy in these areas is clear.

Furthermore, if the Taxpayer can provide additional documentation regarding the blueprint issue, additional revisions will be made. This documentation should be sent to the auditor within 60 days of the date of this letter. If you have any questions regarding this letter, please contact ***** in the Office of Tax Policy at *****.


Danny M. Payne
Tax Commissioner