Tax Type
Retail Sales and Use Tax
Description
Contract coal hauling; "Private transportation system" defined
Topic
Taxability of Persons and Transactions
Date Issued
05-12-2000
May 12, 2000
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you request a ruling as to the sales and use tax application to coal trucking companies. I apologize for the delay in replying to your requests.
FACTS
****** (the"Taxpayer") is a bookkeeping service which represent a number of contract coal hauling companies. The Taxpayer is requesting a ruling on what constitutes a "private transportation system" as related to Title 23 Virginia Administrative Code (VAC) 10-210-960, mining and mineral processing. The Taxpayer is also requesting the tax application to contract coal hauling companies when the private transportation system is owned by either a mining company or a coal processing company.
RULING
VAC 10-210-960.E, copy enclosed, sets forth the department's position with respect to contracted mining activities and provides that "the mining and mineral processing exemption extends to persons engaged in any phase of mining and mineral processing, provided such activities qualify for exemption as set forth in subsections A and B of this section." In other words, if the activity is exempt when performed by the mining or processing company, the same activity would be exempt if contracted out.
Subsection A.2 of this regulation defines mineral processing and addresses private transportation systems as follows:
Mining and processing are separate and distinct activities. The mine site and the processing site constitute separate plant sites unless both are owned and operated by the same person and connected by a private transportation system, such as a conveyor or private roadway. If the mine and the processing plant are owned by different entities, private transportation systems, including hauling vehicles, between the two sites will be exempt only if owned by the processing plant operator.
As provided above, based on the scenario presented in your letter concerning contract coal hauling companies, a private transportation system would entail a private roadway (not for public use) between the mine site and the processing plant. In answer to your request, a contract hauling company would enjoy the mineral processing exemption only if the party doing the hiring owns the mineral processing plant. If a mine operator who does not own the processing plant hires the contract hauling company, the exemption would not apply as this is considered the hauling of finished mined minerals. Should the contract hauler engage the same vehicle in both taxable and exempt hauling activities, the department will look to the preponderance of use rule set forth in 23 VAC 10-210-960.C to determine the tax application to hauling trucks and repair parts.
If you should have any questions, please contact *****, Office of Tax Policy, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20257K
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you request a ruling as to the sales and use tax application to coal trucking companies. I apologize for the delay in replying to your requests.
FACTS
****** (the"Taxpayer") is a bookkeeping service which represent a number of contract coal hauling companies. The Taxpayer is requesting a ruling on what constitutes a "private transportation system" as related to Title 23 Virginia Administrative Code (VAC) 10-210-960, mining and mineral processing. The Taxpayer is also requesting the tax application to contract coal hauling companies when the private transportation system is owned by either a mining company or a coal processing company.
RULING
VAC 10-210-960.E, copy enclosed, sets forth the department's position with respect to contracted mining activities and provides that "the mining and mineral processing exemption extends to persons engaged in any phase of mining and mineral processing, provided such activities qualify for exemption as set forth in subsections A and B of this section." In other words, if the activity is exempt when performed by the mining or processing company, the same activity would be exempt if contracted out.
Subsection A.2 of this regulation defines mineral processing and addresses private transportation systems as follows:
Mining and processing are separate and distinct activities. The mine site and the processing site constitute separate plant sites unless both are owned and operated by the same person and connected by a private transportation system, such as a conveyor or private roadway. If the mine and the processing plant are owned by different entities, private transportation systems, including hauling vehicles, between the two sites will be exempt only if owned by the processing plant operator.
As provided above, based on the scenario presented in your letter concerning contract coal hauling companies, a private transportation system would entail a private roadway (not for public use) between the mine site and the processing plant. In answer to your request, a contract hauling company would enjoy the mineral processing exemption only if the party doing the hiring owns the mineral processing plant. If a mine operator who does not own the processing plant hires the contract hauling company, the exemption would not apply as this is considered the hauling of finished mined minerals. Should the contract hauler engage the same vehicle in both taxable and exempt hauling activities, the department will look to the preponderance of use rule set forth in 23 VAC 10-210-960.C to determine the tax application to hauling trucks and repair parts.
If you should have any questions, please contact *****, Office of Tax Policy, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20257K
Rulings of the Tax Commissioner