Tax Type
Retail Sales and Use Tax
Description
Agricultural products; Occasional sales
Topic
Exemptions
Property Subject to Tax
Date Issued
07-06-2000
July 6, 2000
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek correction of the retail sales and use tax audit assessment issued to your client, ****** (the "Taxpayer"), for the period July 1995 through May 1998. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer is a Subchapter S Corporation established for the purpose of breeding miniature horses. The Taxpayer eventually expanded its business to include the retail sale of hay, mulch, and straw, and the sale and lease of farm equipment. The Taxpayer has been a registered dealer since October 1, 1991, the beginning period of the Taxpayer's first audit.
The Taxpayer is taking exception to the taxing of various retail sales made during the audit period. The Taxpayer believes that it engaged in the rental of farm equipment without an operator on enough occasions to warrant the collection of the tax. However, the Taxpayer feels the sale of miniature horses, farm equipment, and straw, hay and mulch, occurred infrequently enough to qualify such sales as occasional in nature and therefore exempt from the tax pursuant to Code of Virginia § 58.1-609.10(2). The Taxpayer is requesting that the audit be revised accordingly.
DETERMINATION
Code of Virginia § 58.1-609.10(2) provides an exemption from the retail sales and use tax for an "occasional sale" as defined in § 58.1-602. That section defines an "occasional sale" as follows:
A sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all of the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration.
The department's records show that the Taxpayer is a registered sales and use tax dealer, and has been such since October 1, 1991. The Taxpayer holds a certificate of registration with the department to collect and remit the tax on its sales of tangible personal property in Virginia. As provided in the statutory definition of an "occasional sale" cited above, an occasional sale is a sale of tangible personal property not held by the seller for an activity for which he is required to hold a certificate of registration. Based on the information provided, all the sales for which the Taxpayer is taking exception, i.e., miniature horses, farm equipment, and straw, hay and mulch, are farming and agricultural products. Due to the fact the Taxpayer registered with the state as a dealer, I must find that the sales at issue do not qualify as occasional sales, and are held by the Taxpayer for an activity that required it to register.
Certificates of Exemption
The Taxpayer proposes to obtain certificates of exemption relating to certain sales held taxable in the audit. If the Taxpayer obtains a complete and properly executed exemption certificate for any sale held taxable, the department will review it and adjust the audit findings, as appropriate. Please send the certificates to in the department's Office of Tax Policy, P. O. Box 1880, Richmond, Virginia 23218-1880, within 60 days from the date of this letter. If the requested information is not received within the allotted time, the assessment will be correct as issued and collection action will resume. Any questions regarding this determination may be directed to ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/18260K
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek correction of the retail sales and use tax audit assessment issued to your client, ****** (the "Taxpayer"), for the period July 1995 through May 1998. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer is a Subchapter S Corporation established for the purpose of breeding miniature horses. The Taxpayer eventually expanded its business to include the retail sale of hay, mulch, and straw, and the sale and lease of farm equipment. The Taxpayer has been a registered dealer since October 1, 1991, the beginning period of the Taxpayer's first audit.
The Taxpayer is taking exception to the taxing of various retail sales made during the audit period. The Taxpayer believes that it engaged in the rental of farm equipment without an operator on enough occasions to warrant the collection of the tax. However, the Taxpayer feels the sale of miniature horses, farm equipment, and straw, hay and mulch, occurred infrequently enough to qualify such sales as occasional in nature and therefore exempt from the tax pursuant to Code of Virginia § 58.1-609.10(2). The Taxpayer is requesting that the audit be revised accordingly.
DETERMINATION
Code of Virginia § 58.1-609.10(2) provides an exemption from the retail sales and use tax for an "occasional sale" as defined in § 58.1-602. That section defines an "occasional sale" as follows:
A sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all of the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration.
The department's records show that the Taxpayer is a registered sales and use tax dealer, and has been such since October 1, 1991. The Taxpayer holds a certificate of registration with the department to collect and remit the tax on its sales of tangible personal property in Virginia. As provided in the statutory definition of an "occasional sale" cited above, an occasional sale is a sale of tangible personal property not held by the seller for an activity for which he is required to hold a certificate of registration. Based on the information provided, all the sales for which the Taxpayer is taking exception, i.e., miniature horses, farm equipment, and straw, hay and mulch, are farming and agricultural products. Due to the fact the Taxpayer registered with the state as a dealer, I must find that the sales at issue do not qualify as occasional sales, and are held by the Taxpayer for an activity that required it to register.
Certificates of Exemption
The Taxpayer proposes to obtain certificates of exemption relating to certain sales held taxable in the audit. If the Taxpayer obtains a complete and properly executed exemption certificate for any sale held taxable, the department will review it and adjust the audit findings, as appropriate. Please send the certificates to in the department's Office of Tax Policy, P. O. Box 1880, Richmond, Virginia 23218-1880, within 60 days from the date of this letter. If the requested information is not received within the allotted time, the assessment will be correct as issued and collection action will resume. Any questions regarding this determination may be directed to ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/18260K
Rulings of the Tax Commissioner