W. Va. Code R. § 110-15-7

Current through Register Vol. XLI, No. 24, June 14, 2024

Section 110-15-7 - Tax Computed on Gross Proceeds or Gross Value of Tangible Personal Property Sold to Consumers, or Consumed or Used, by the Manufacturer or Producer Thereof

7.1. Sales by Producers and Manufacturers. - A person exercising the privilege of producing for sale, profit or commercial use, any natural resource product or manufactured product and engaged in the business of selling the same at wholesale or retail shall collect consumers sales and service tax on the gross proceeds from such sales unless the transaction is exempt per se from the consumers sales and service tax, or the vendor, in good faith, takes from the purchaser a property executed exemption certificate or the purchaser's direct pay permit number.

7.2. Use by Producer or Manufacturer. - A person exercising the privilege of producing for sale, profit or commercial use, any natural resource product or manufactured product which he then uses or consumes in a manner which would be taxable had such person purchased the product from another person, such person shall pay consumers sales or use tax on the gross value of such product or products at the time they are first used or consumed by him in this State. "Gross value" shall be determined as provided in Section 7.3 of these regulations.

7.3. Determination of "Gross Value". - Whenever a person partially or wholly consumes or uses tangible personal property in this State which he produced or manufactured in this State or in another state, the gross value thereof for consumers sales and use tax purposes shall correspond as nearly as possible to the gross proceeds which such person would have received from the sale of such natural resource product or manufactured product to another person in an arms-length transaction, as that term is defined for federal income tax purposes. Such value shall be determined by application of the following rules in the order stated:

7.3.1. The value of the natural resource product or the manufactured product consumed or used shall be equal to the selling price, at the place of use or consumption, of similar products of like quality and character offered for sale in similar quantities by persons unrelated to the taxpayer.

7.3.2. In the absence of sales of similar natural resource products or similar manufactured products by other persons as a guide to value, gross value shall be equal to the average price at which sales of the same or a similar product are made during the taxable year to customers of the producer or manufacturer.

7.3.3. In the absence of sales to customers of the taxpayer as a guide to value, gross value shall be determined by first determining the cost of the product and adding thereto the average markup realized by the producer or manufacturer of the product being valued. The cost of the product shall include every item of cost attributable to that particular product, including all direct and indirect overhead costs.

7.4. Examples.

7.4.1. Example 1. - ABC Company is an integrated manufacturer of asphalt and a road contractor. Some of the asphalt ABC Company manufactures is sold to other contractors. ABC Company is exempt from paying consumers sales and use taxes on tangible personal property directly used or consumed in the manufacture of asphalt. Until March 1, 1989, ABC Company was also exempt from paying consumers sales and use taxes on tangible personal property directly used or consumed in his contracting activity. ABC Company must now pay consumers sales and use taxes on all tangible personal property and/or taxable services purchased for use or consumption in his contracting activity unless a specific exemption applies. As a road contractor, ABC Company may be engaged in building or resurfacing roads under contracts with the State of West Virginia or a political subdivision thereof, or with the United States government, or with other persons such as commercial and industrial business and residential property owners. The asphalt which ABC Company manufactures and sells or uses or consumes will be taxed as follows:

1. Consumers sales and service tax must be collected on sales of asphalt to other contractors and persons unless ABC Company accepts in good faith an exemption certificate or a valid direct pay permit number.

2. As of October 1, 1990, asphalt which ABC Company manufactures and uses or consumes in building or resurfacing roads under a single government contract for materials and labor is subject to consumers sales and use tax. See Section 109 of these regulations for transition rules concerning the taxing of materials for use in governmental contracts.

3. Asphalt which ABC Company manufactures and uses or consumes in building or resurfacing roads, parking lots and driveways, etc. in this State for other persons is subject to consumers sales and service tax based on the gross value of the asphalt so used or consumed.

W. Va. Code R. § 110-15-7