W. Va. Code R. § 110-15-114
Current through Register Vol. XLI, No. 24, June 14, 2024
Section 110-15-114 - Sales of Tangible Personal Property with Incidental Installation114.1. The sale of certain types of tangible personal property with incidental hookup, connection or installation by a "retail dealer" or by his arrangement is a transaction which is considered to be a sale of tangible personal property to a final consumer. Therefore, the retail dealer who sells such tangible personal property with incidental hookup, connection or installation may purchase the tangible personal property exempt from tax as a purchase for resale. This rule should not be confused with Section 113 regarding building equipment. A "retail dealer," is a merchant engaged in reselling to the general public on a recurring "over the counter" basis from a general or special store during regular business hours. The term "retail dealer" does not include a contractor who makes only occasional retail sales to the public and who does not have a regular retail place of business. This section does not apply to installation performed by a third party arranged for directly by the purchaser, and not by the retail dealer.114.2. In order to determine whether hookup, connection, or installation is incidental to the retail sale of tangible personal property, the true object of the transaction must be examined. If the true object of the transaction is to secure the tangible personal property, then the entire transaction is taxable, including the hookup, connection or installation charge. 114.2.1. Hookup, connection or installation will be considered incidental, when rendered in connection with the retail sale of the items set forth below. This list is for illustrative purposes only and is not intended to be all-inclusive. Wall-to-wall carpeting
Mobile Homes (See Section 122 for additional rules relating to the sale and installation of mobile homes)
Window air conditioning units
Dishwashers
Clothing washing machines or dryers
Other household appliances
Drapery rods
Window shades
Venetian blinds
Canvas awnings
Free-standing industrial and commercial equipment
114.3. Elements of a mixed contract, e.g., where an installation contract is mingled with a tangible personal property sales contract, cannot be separated for consumers sales and service tax purposes. For example, the entire transaction is taxable if it involves the sale by a retail dealer of tangible personal property with incidental installation. (Special rules apply to the sale and installation of mobile homes. See Section 122 of these regulations for details.) On the other hand, the entire transaction would be exempt if the transaction involves contracting for a capital improvement to a building or structure or real property.114.4. Certain services are subject to tax when performed under a contract for the incidental installation of the machinery, equipment or other tangible personal property, which is not done in connection with a capital improvement to a building, structure, or real property. Examples of these services are: electrical installation, plumbing, welding, and pipelining, etc. Example: Company B contracts with company A to furnish and install a portable conveyor unit in company A's new building. Company B can purchase the portable conveyor unit tax free because the portable conveyor unit maintains its identity as tangible personal property after installation and does not become a component part of the real property. Company B would then charge tax to company A on the sale of the portable conveyor unit. Installation would be part of the total gross receipts subject to consumers sales and service tax. It makes no difference whether the charge for installation is separately or included within the selling price of the machinery and equipment.
114.5. If the sales transaction is one made with an out-of-state vendor and the tangible personal property is shipped in interstate commerce to a consumer or user in West Virginia, and is not otherwise exempt from tax, the final purchaser is required to pay West Virginia use tax on the purchase price of the tangible personal property and installation, unless the transaction involves contracting or a capital improvement to a building or structure or real property.114.6. Example 1. Downtown, Inc. a retail dealer, has a retail outlet and makes recurring sales to the general public. Downtown, Inc. sells a replacement hot water heater from inventory to a homeowner and either installs it or makes arrangements for its installation. The transaction is a retail sale of tangible personal property and the total charge to the homeowner for the merchandise and the installation is subject to sales and use tax. Downtown, Inc. may purchase the hot water heater exempt from tax as a purchase for resale. Example 2. Uptown Construction Co. is a heating and plumbing contractor who makes only occasional retail sales to the public and who does not have a regular retail place of business. Uptown Construction Co. sells a homeowner a replacement hot water heater and installs it. The sale and installation of the hot water heater is considered to be contracting because it is not performed by a "retail dealer." Sales and use tax is not charged to the customer on the transaction, but the contractor must pay sales and use tax on his purchase of the hot water heater and other items used in the installation.
Example 3. Mr. Homeowner must replace his hot water heater. He goes to Downtown, Inc. a retail store and purchases the hot water heater and other items needed for installation and pays consumers sales and service tax on the purchase. Mr. Homeowner then arranges with Uptown Construction Co. to install the hot water heater. The installation transaction with Uptown Construction Co. is considered to be contracting. No sales or use tax is charged to the homeowner on the installation, but the contractor must pay sales or use tax on the equipment used in the installation.
W. Va. Code R. § 110-15-114