Sales Tax State Activity Update - October 2004

Virginia Explains Plant Installer is a Retailer not a Contractor

The Virginia Tax Commissioner explained that the sale and installation of trees, shrubs, plants, and sod is subject to tax and properly assessed by the Department of Revenue (“Department”). The taxpayer argued it is a real property contractor that maintains no inventory and pays sales tax to vendors for the purchase of landscape materials installed pursuant to each contract.

The Department cites Title 23 of the Virginia Administrative Code (VAC) 10-210-610 applicable for nurserymen and landscape contractors that specifically provide that the furnishing and transplanting of trees, shrubs, and plants is a taxable retail sale, and not the provision of services with respect to real estate. In issuing the assessment, the Department determined the assessment amount by applying the tax rate to marked-up sales amounts and reducing the total sales tax by credit allowed for sales tax paid to vendors on the purchase of materials for resale.

The full text may be accessed at: http://policylibrary.tax.state.va.us/OTP/policy.nsf

Virginia Tax Commissioner Document No. 04-100

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