The Virginia Department of Taxation states that contractors will be deemed the final users of items, such as doors, windows, fences, cabinets and other property, making them liable for applicable sales and use taxes when the items become part of real property. Photo courtesy of Kenny Eliason.

Virginia contractors who sell and install specific personal property, such as windows, would be categorized as final consumers of the property, according to a revised rule introduced by the state’s tax department.

Outlined in a proposed fast-track rule amendment, which has been published in the Virginia Register of Regulations, the Department of Taxation (DOT) states that contractors will be deemed the final users of items, such as doors, windows, fences, cabinets and other property. Unless otherwise noted, DOT writes that contractors would be liable for applicable sales and use taxes when the items become part of real property.

DOT defines contractors as “any person who contracts to perform construction, reconstruction, installation, repair, or any other service with respect to real estate or fixtures thereon, including highways, and in connection therewith to furnish tangible personal property, whether such person is a prime contractor or subcontractor.”

The amendment also provides a provision enabling vendors to absorb sales and use taxes, contingent on them itemizing the tax amount for the purchaser during the sale and subsequently remitting the collected funds to the department.

The public comment deadline ends Sept. 15, 2023. The effective date is Sept. 30, 2023.

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