Tax Type
Retail Sales and Use Tax
Description
Taxpayer seeks exemption
Topic
Exemptions
Date Issued
04-22-1999
April 22, 1999
Re: Request for Ruling: Retail Sales and Use Tax
Dear***
This is in reply to your letter of February 2, 1999, in which you request a ruling regarding the application of the retail sales and use tax to the purchase of a special tractor for use in your vineyard.
FACTS
******* (The "Taxpayer') is a vineyard and winery which grows its own grapes for the purpose of producing wine. The Taxpayer states that it will be purchasing a tractor which will be used for tilling soil and cutting extraneous shrubs and bushes which impede the growth of the vines. The tractor is a special size specifically constructed to fit between the rows in the vineyard. Accordingly, the Taxpayer seeks an exemption for the purchase of the tractor.
DETERMINATION
Code of Virginia § 58.1-609.2(1) provides an exemption from the retail sales and use tax for "Commercial feeds; ... farm machinery; ... and agricultural supplies provided the same are sold to and purchased by farmers for use in agricultural production, ... for market.'
Farmers will have many different uses for machinery or supplies used in a farming operation. Some uses may or may not qualify as a use in agricultural production for market. In this instance, however, I would concur that the tractor at issue qualifies for the exemption, as it will be used in agricultural production for market. However, I must caution the Taxpayer that if such equipment is used in both exempt and nonexempt activities, only a partial exemption is allowed. Sales tax would then be due the Commonwealth on the prorated portion of the value of the tractor based on the time used in a taxable manner versus that amount of time used in an exempt manner. I have enclosed Public Document 92-250 (12/23/92), which further illustrates the department's longstanding policy regarding the agricultural exemption and equipment used in both exempt and nonexempt activities.
If you should have any additional questions regarding this matter, please contact ***** of the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20892Q
Rulings of the Tax Commissioner