West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-15 - Consumer Sales And Service Tax And Use Tax › Section 110-15-113 - Contractors Who Are Also Retailers

Current through Register Vol. XLI, No. 28, July 12, 2024
113.1. Special rules apply where contractors
				are in a dual business which includes reselling to the general public, on a
				recurring "over-the-counter" basis, the same type of tangible personal property
				which are used by them in their own contracting activities. A person operating
				in such a manner is referred to in this rule as a contractor-retailer. A sale
				by a contractor-retailer of tangible personal property, which does not provide
				for installation of the merchandise sold is considered a retail sale and is
				subject to the consumers sales and service tax. Conversely, a sale by a
				contractor-retailer of tangible personal property which provides for
				installation of the tangible personal property is generally considered to be
				contracting and consumers sales and service tax shall be paid by the
				contractor-retailer based upon the cost of the tangible personal property at
				the time the tangible personal property is withdrawn from inventory for use in
				the contracting activity unless the rules set forth in Section 114 apply.
				Section 114 of these regulations provides special rules for retailers who sell
				certain types of tangible personal property including incidental
				installation.
113.2. A
				contractor-retailer may purchase construction materials, supplies and equipment
				etc. from vendors free of consumers sales and service tax when the purchase is
				for resale. When a valid exemption certificate is furnished, the vendor is
				relieved from the responsibility of collecting the tax if the purchaser has
				demonstrated that he is a contractor-retailer under the provisions of this
				rule. The burden of such proof is upon the purchaser.
113.3. The business records of a
				contractor-retailer must clearly reflect the use made of items purchased and
				the records must be in such form that the Tax Commissioner can readily
				determine that the proper consumers sales and use tax liability is being
				reported and paid.
113.4. The
				following examples are offered to illustrate the responsibility for paying and
				remitting consumers sales and service tax under the above rules:
Example 1. ABC Company operates a retail outlet that sells
				  lumber and other building materials and supplies. ABC Company is also a
				  contractor which builds residential and commercial structures. ABC Company
				  would be considered a contractor-retailer and would, therefore, purchase all
				  inventory items for resale. Those items which are used in the performance of a
				  construction contract would be subject to tax in the period they are withdrawn
				  from inventory. The tax would be computed on the cost of the items withdrawn
				  from inventory. Those items which are sold over-the-counter in the retail
				  outlets would be subject to tax at the time of sale. The tax would be computed
				  on the over-the-counter selling price.
Example 2. EFG Company is a mechanical contractor and has no
				  retail outlets. EFG Company rarely sells any of its inventory to other persons
				  or to other contractors. EFG Company would not be considered a
				  contractor-retailer under this rule. However, EFG Company would be considered a
				  contractor and must pay tax to its vendor at the time it purchases any
				  construction materials, supplies, equipment or other tangible personal
				  property. However, on those rare occasions when an inventory item is sold to
				  another person or to another contractor, tax must be collected at the time of
				  sale, therefore, EFG Company should be registered to collect consumers sales
				  and service tax. An adjustment can be made to the consumers sales and service
				  tax reported by taking a credit for tax previously paid on the item
				  sold.
Example 3. Country Construction Company is owned and operated
				  by two individuals in a rural West Virginia community. They do not have a
				  retail outlet but they frequently make sales of building materials which are in
				  their inventory to local residents. Country Construction Company would be a
				  contractor-retailer and could purchase all inventory items for resale. Those
				  items which are used in the performance of a construction contract would be
				  subject to tax in the period they are withdrawn from inventory. The tax would
				  be computed on the cost of the items withdrawn from inventory. Those items
				  which are sold to residents would be subject to the consumers sales and service
				  tax at the time of the sale. The tax would be computed on the selling price of
				  the items.
Example 4. Downhome Construction Company is operated by two
				  individuals in a rural West Virginia community. They do not have a retail
				  outlet and rarely make sales of building materials from their inventory to
				  local residents. Downhome Construction Company would not be considered a
				  contractor-retailer under this rule. Rather, Downhome Construction Company
				  would be considered a contractor and must pay tax to its vendor at the time it
				  purchases any building materials, supplies and equipment. When sales are made
				  to local residents, tax must be collected at the time of sale, therefore,
				  Downhome Construction Company should be registered to collect consumers sales
				  and service tax. However, Downhome Construction Company can adjust its
				  consumers sales and service tax report by taking a credit for tax paid to its
				  vendor on the item sold to the local resident.