Which 2011 tax rate applied to setup components sold with a manufactured home versus sold later?

Plain-English summary

Virginia applied different 2011 rates depending on when the setup component was sold. A component attached to or purchased with the manufactured home, becoming an integral part and included in the home's sales price, used the 3% motor-vehicle sales-and-use-tax rate.

A setup item sold after the home's initial sale used the 5% retail sales-and-use-tax rate then in effect. The move from the older 4.5% retail rate to 5% was the only policy change identified.

The prior treatment of septic tanks, wells, driveways, patios, walkways, decks, outdoor pole lighting, and entrance or exit stairs and steps remained effective.

What this means for you

• Tie setup components to the initial manufactured-home sales contract and price.
• Document when each item was sold and attached.
• Later component sales can use the general retail rate rather than the home rate.
• The percentages in this 2011 ruling are historical.

Common questions

Q: What rate applied to integral components sold with the home?
A: The then-3% motor-vehicle sales-and-use-tax rate.

Q: What rate applied to later setup-component sales?
A: The then-5% retail sales-and-use-tax rate.

Q: Did the underlying setup policy change?
A: No; only the retail rate had increased.

Citations and references

• Va. Code § 36-85.3.
• Va. Code § 58.1-2402.
• Virginia Public Documents 91-125 (July 19, 1991), 98-100 (May 22, 1998), and 10-268 (December 16, 2010).

Subject

Set-up components; manufactured home; motor vehicle sales and use tax rate

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-143

Original ruling text

August 5, 2011

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This is in response to your letter in which you request confirmation as to the continued validity of the set-up component policy set out in Public Document (P.D.) 91-125 (7/19/91) and P.D. 98-100 (5/22/98).

In P.D. 10-268 (12/16/10) that was recently issued to your organization, the Department made reference to P.D. 91-125 and P.D. 98-100, but made no policy chance in regard to set-up components. I would note a tax rate change, however. In P.D. 91-125, the Tax Commissioner indicated that all set-up materials sold after the initial sale of a manufactured home are taxed at a 4½% retail sales and use tax rate. In P.D. 10-268, the Tax Commissioner indicated that all set-up materials sold after the initial sale of a manufactured home are now taxed at a 5% retail sales and use tax rate. This higher sales tax rate is the only change noted because the retail sales and use tax rate had increased since the issuance of P.D. 91-125.

Pursuant to Va. Code § 58.1-2402, the motor vehicle sales and use tax applicable to a manufactured home as defined in Va. Code § 36-85.3 is still imposed at a 3% rate. Thus, all set-up components attached to or purchased at the time such manufactured home is sold as to become an integral part of such home and included in the sales price of such home is taxed at the motor vehicle sales and use tax rate of 3%.

The policy set out in P.D. 98-100 for septic tanks, wells, driveways, patios, walkways, decks, outdoor pole lighting, and entrance/exit stairs or steps remains in effect.

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

The Code of Virginia sections and public documents cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this determination, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

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