Were separately stated fees to pick up, remove, and recycle an old mattress taxable when offered only with the sale and delivery of a new mattress?

Plain-English summary

Fees to pick up, remove, and recycle a customer's old mattress were taxable when the retailer offered those services only with the sale and delivery of a new mattress.

Virginia's sales-price definition includes services that are part of or connected with a tangible-property sale. The Commissioner compared the mattress charges to taxable tire, antifreeze, oil, and automotive-disposal fees connected with replacement sales. Separate statement on the invoice did not remove the charges from the taxable price.

A disposal service offered independently of a property sale could be nontaxable, but that was not this retailer's arrangement.

What this means for you

If removal or recycling is available only to purchasers of a replacement product, treat the fee as connected with the taxable sale even when it appears as a separate invoice line.

Common questions

Were the fees separately stated? Yes.

Did separate statement make them nontaxable? No.

What fact linked the service to the sale? It was offered only to customers buying a new mattress.

Citations and references

• Va. Code § 58.1-602 — sales price includes services that are part of the sale.
• 23 VAC 10-210-4040 B 1 — services in connection with tangible-property sales.
• Virginia Tax Bulletin 94-10 — analogous disposal fees cited in the ruling.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 20-11

Original ruling text

January 21, 2020

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the “Taxpayer”), in which you request a ruling on the application of the retail sales and use tax to charges for mattress removal.

FACTS

The Taxpayer sells mattresses. For a fee, the Taxpayer offers pick up and removal of the old mattress at the time of the delivery of a new mattress. The pick up and removal service is only offered to customers who purchase a new mattress. The Taxpayer charges customers a flat fee for the service, in addition to a recycling fee, which are separately stated on the invoice. The Taxpayer requests a ruling regarding the taxability of these charges.

RULING

Virginia Code § 58.1-602 defines “sales price” as “[t]he total amount for which tangible personal property or services are sold, including any services that are a part of the sale, valued in money, whether paid in money or otherwise.” Under Title 23 of the Virginia Administrative Code (VAC) 10-210-4040 B 1 any services that are included in or in connection with the sale of tangible personal property are taxable.

In applying these provisions, the Department has required dealers to collect the tax on disposal fees for tires, anti-freeze, motor oil and automobile accessories charged in connection with the sale of such items, whether or not the disposal fees were separately stated. See Virginia Tax Bulletin (VTB) 94-10 (12/1/1994). By contrast, dealers who provided disposal services totally independent of the sale or provision of tangible personal property were deemed to be providing a nontaxable service, and were not required to collect the tax on such transactions.

Any charges for pick-up, removal and recycling of old mattresses in connection with the sale of new mattresses are analogous to the charges to dispose of old tires, anti-freeze, oil or automobile accessories in connection with the sale of new such items. The Taxpayer here only offers the mattress removal service in connection with the sale of new mattresses. As such, in the Department’s opinion, the Taxpayer must collect sales tax on such charges.

This ruling is based on the facts presented as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

The Code of Virginia section, regulation, and tax bulletin cited are available on-line at www.tax.virginia.gov in the Laws, Rules & Decisions section of the Department’s web site. If you have any questions regarding this ruling, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/2186.M