West Virginia Code of State Rules
Agency 110 - Tax
Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT
Series 110-15 - Consumer Sales And Service Tax And Use Tax
Section 110-15-116 - Maintaining, Servicing, Repairing, Altering, Improving, or Decorating of Buildings, Structures or Real Property

Universal Citation: 110 WV Code of State Rules 110-15-116

Current through Register Vol. XLI, No. 38, September 20, 2024

116.1. General Rule. - The activity of maintaining, servicing, repairing, altering, improving or decorating of buildings, structures or real property can either be a taxable service or contracting. The activity of maintaining, servicing, repairing, altering, improving, or decorating of buildings, structures or real property is generally considered to be a taxable service, whether or not any tangible personal property is transferred in conjunction with the service. However, the maintaining, servicing, repairing, altering, improving or decorating of buildings, structures or real property will be considered to be contracting if it involves either a capital improvement or is performed on or connected with new construction, reconstruction, alteration, expansion, or remodeling which itself results in a capital improvement to the building, structure or real property. Guidelines for determining whether these situations exist are given in Sections 116.1.1 and 116.1.12 of these regulations.

116.1.1. Capital Improvement. - The maintaining, servicing, repairing, altering, improving, or decorating of buildings, structures or real property is considered to be contracting if it results in a capital improvement to the building, structure or real property.
116.1.1.1. Factors for Determination of Capital Improvement. - In determining whether maintaining, servicing, repairing, altering, improving, or decorating of buildings, structures or real property results in a capital improvement to a building or other structure or to real property, the following factors shall be considered. If either of the criteria is met, the maintaining, servicing, repairing, altering, improving, or decoration will be considered to be a capital improvement and will be considered to be contracting.
116.1.1.1.a. The maintaining, servicing, repairing, altering, improving, or decoration results in a significant increase in the value of the building or other structure or of the real property.

116.1.1.1.b. The maintaining, servicing, repairing, altering, improving, or decoration results in an appreciable increase in the original useful life of the building or other structure or of the real property.

116.1.2. New Construction, Reconstruction, Alteration, Expansion or Remodeling. - The maintaining, servicing, repairing, altering, improving, or decoration of buildings, structures or real property is contracting when it is performed "on or connected with" new construction, reconstruction, alteration, expansion or remodeling of real property or structures which itself results in a capital improvement to the building, structure, or real property.
116.1.2.1. The term "on or connected with" as used in Section 116.1.2 is broad and conveys its generally accepted meaning. Therefore, in a specific situation, the facts relating thereto are controlling in determining whether the service is contracting or is a taxable service. "On or connected with" does not connote that things connected have to be primary or subsidiary to the construction, reconstruction, alteration, expansion or remodeling of the building or other structure or real property, resulting in a capital improvement thereto.
116.1.2.1.a. An incidental relationship can qualify the activity as contracting if the relationship forms an immediate connection with the construction activity.

116.1.2.1.b. The presence of a time relationship can also be a factor in determining the applicability of the contracting exemption.

116.1.2.1.c. The motive behind the activity and the course of events that could reasonably be expected to occur would be further consideration in determining if an exempt contracting service is involved.

116.1.2.1.d. A physical relationship is also a factor that should be evaluated. If a building is constructed to house machinery, any enumerated services relating to the installation of that machinery would be an exempt contracting service. For example, piping joining two pieces of equipment housed in separate buildings would be treated as tax exempt contracting if the equipment in either building was installed while such new construction, reconstruction, alteration, expansion or remodeling of the structure was also taking place to house the equipment.

116.2. Examples of Maintenance, Service, Repair, Alteration, improvement, or Decoration of Buildings, Structures or Real Property Constituting a Taxable Service.

Example 1. The replacement of some shingles, or the patching of a roof is a repair. However, a new asphalt shingle roof is a capital improvement.

Example 2. A contractor sells and installs an above-ground swimming pool. The pool consists of a vinyl liner supported by an aluminum and wood frame which rests on the ground and a wood and metal deck. The vinyl liner rests on a bed of sand to prevent damage. The deep end of the pool is set approximately 2 feet into the ground. The pool may be dismantled and moved without substantially damaging the real property. The installation of the pool is not a capital improvement, as it may be dismantled and moved without substantial injury to the land, and there is no intent that it become affixed so that it has become part of the real property. Therefore, the charges for the sale and installation of the pool are subject to the tax.

Example 3. The replacement of broken window panes is a repair to a building, which is taxable.

Example 4. Company A enters into an agreement to provide periodic maintenance services on elevators and escalators belonging to its customers. The contract provides for inspection, lubrication and the performance of necessary repairs. These services are taxable.

Example 5. The periodic repainting of a building is not by itself a capital improvement. The entire charge for the paint and the service is taxable.

Example 6. A landscaping company enters into a contract to mow a customer's lawn on a regular basis, re-seed in the spring and fall and fertilize as needed. The total charge to the customer is taxable.

Example 7. A consumer has a maintenance contract with a heating and air conditioning company to supply all parts and emergency services for his heating and air conditioning system for one full year for a set fee. The cost of the contract is taxable, whether or not any services or parts are actually furnished.

Example 8. Repair of broken or defective glass is a taxable service.

Example 9. Replacement of broken windowpanes is a taxable service.

Example 10. Replacing individual or damaged roof shingles is a taxable service.

Example 11. Replacing or repairing a portion of worn out or broken kitchen cabinets is a taxable service.

Example 12. Replacement of garage door hinges is a taxable service.

Example 13. Replacing or repairing a portion of a broken or worn tub, shower, or faucets is a taxable service.

Example 14. Replacing or repairing a portion of a broken water heater, furnace or central air conditioning compressor is a taxable service.

116.3. Examples of Maintenance, Service, Repair, Alteration, Improvement or Decoration of Buildings, Structure or Real Property Constituting Contracting.

Example 1. The building of a garage or adding a garage to an existing building would be considered a capital improvement.

Example 2. Adding a redwood deck to an existing structure would be considered a capital improvement.

Example 3. Replacing a complete roof on an existing structure would be considered a capital improvement.

Example 4. Adding a new room to an existing building would be considered new construction.

Example 5. Adding a new room by building interior walls would be considered a capital improvement.

Example 6. Replacing kitchen cabinets with some modifications would be considered a capital improvement.

Example 7. Paneling existing walls would be considered a capital improvement.

Example 8. Laying a new floor over an existing floor would be considered a capital improvement. (See special rules for carpeting and other floor coverings sold and installed by retailers in Section 114 of these regulations.)

Example 9. Rebuilding a structure damaged by flood, fire or other uncontrollable disaster or casualty would be considered to be a capital improvement.

Example 10. Building a new wing to an existing building would be considered a capital improvement.

116.4. Taxability of Sales. - To determine whether consumers sales and service tax should be collected from the customer and remitted, it is necessary to first determine whether the type of activity involved is contracting or a taxable service by examining the criteria set forth in Section 116.1 of these regulations.

116.4.1. Sales of Contracting. A person who engages in contracting does not charge consumers sales and service tax to the customer. The sale of contracting is exempt from sales and use tax as set forth in Section 9.2.17 of these regulations.

116.4.2. Sales of Service. - A person who engages in providing of taxable service must collect and remit consumers sales and service tax from the customer or obtain an exemption certificate or direct pay permit.

116.5. Taxability of Purchase. - In order to determine whether consumers sales and use tax should be paid on purchases for use in these types of activities, it is necessary to first determine whether the type of activity involved is contracting or a taxable service by examining the criteria set forth in the previous Section 116.1 of these regulations.

116.5.1. Taxability of Purchases for Use in Contracting Activity. - Beginning March 1, 1989, except as outlined in Section 108 of these regulations relating to transition rules and Section 109 of these regulations relating to transition rules for the exemption for purchases of material used in government contracts that was repealed October 1, 1990, a person who engages in contracting must pay consumers sales or use tax on his purchases for use in the contracting activity. This includes machinery, equipment, materials, and services used in the contracting activity. It does not include labor provided by employees of the contractor. Transition rules are provided in Section 108 of these regulations. Special transition rules are provided in Section 109 of these regulations for contracts with the United States, the State of West Virginia, its political subdivision, or corporate entities created by the West Virginia Legislature.

116.5.2. Taxability of Purchases for Use in Service Activity. - On or after July 1, 1989, a person who engages in the providing of a service is taxable on purchases for use in his taxable service activity, except for purchases for resale.

Disclaimer: These regulations may not be the most recent version. West Virginia may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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