Sales Tax State Activity Update - November 2005

Virginia – 1, Scoreboards – 0 / Scoreboards Taxed as Real Property

A recent ruling by the Virginia Department of Revenue Tax Commissioner determined that scoreboards installed for a public school system became real property upon installation.

The Department audited the contractor and assessed use tax on its purchases of the scoreboards and materials used to install them. The Department determined the taxpayer inappropriately purchased the scoreboards and the installation materials as sales for resale to an exempt government entity.

The Tax Commissioner points to the contract language between the contractor and the public school system as the basis for the determination. The contract indicates that installation includes digging footings, placing I-beams on poles, pouring concrete and mounting the scoreboard and presentation panel.

The scoreboards were eight to thirty-six feet in width and five to eight feet in height, mounted ten feet above ground on poles to withstand wind speeds of up to one-hundred miles per hour. For these reasons, the Tax Commissioner determined that the scoreboards become real property upon installation and the use tax was assessed properly.

View the full text at the Virginia Tax Policy Library.

(Virginia Department of Revenue, Ruling of the Tax Commissioner, 05-159, 10/7/05)

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