Tax Type
Egg Excise Tax
Description
Egg Sales to U.S. Government
Topic
Basis of Tax
Exemptions
Date Issued
08-18-2000
August 18, 2000
Re: Request for Ruling: Virginia Egg Excise Tax
Dear ****
This is in reply to your letter concerning whether the egg products you (the "Taxpayer") sell to the federal government are subject to the Virginia Egg Excise Tax. I apologize for the delay in responding to your letter.
FACTS
The taxpayer, a food distributor, sells egg products to the federal government. You are requesting clarification on the requirements for collecting the Virginia Egg Excise Tax on the sale of egg products to the United States Government.
RULING
Code of Virginia § 3.1-796.11:3 provides, in pertinent part, that:
There is hereby levied on eggs purchased or sold for use or consumption in Virginia an excise tax of five cents per thirty-dozen case or, if the eggs are purchased or sold in other than shell form, eleven cents per hundred pounds of liquid eggs or liquid equivalent; however, such excise tax shall be levied only once.
Concerning a "handler of eggs," Code of Virginia § 3.1-796.11:4 provides, in pertinent part, that:
For the purpose of carrying out the provisions of this article, the handler shall collect the tax imposed by this article from the person who purchases eggs for use or consumption in Virginia and shall remit such tax or assessment to the Tax Commissioner ....
The term "handler" means any person who operates a grading station, a packer, huckster, distributor or other person who purchases, sells, or handles eggs that are used at the wholesale level for consumption in Virginia or a farmer who packs, processes or otherwise performs the functions of a handler. The term "handler" includes any person in Virginia who purchases eggs, or the liquid equivalent thereof, from anyone other than a "registered handler" for use or consumption at wholesale in Virginia.
As a result, a handler is required to collect the Egg Excise Tax from customers who purchase shell eggs, liquid eggs, or liquid equivalents for use in Virginia. The handler must remit the taxes collected to the department.
There is no general provision in Virginia law nor specific provision in Code of Virginia § 3.1-796.11:5 to exempt the federal government from the Egg Excise Tax. The Supremacy Clause of the United States Constitution, however, prohibits states from directly taxing the United States government its instrumentalities. (McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819.)) States do not have the power, by taxation or otherwise, to retard, impede, burden, or control the operations of the federal government. Additionally, if the legal incidence of the tax falls on the federal government, the federal government would be immune from state taxation under the Supremacy Clause.
The Buck Act of 1940 waived Federal immunity with respect to sales, use, and income taxes on certain activities occurring within Federal areas. Specifically, § 105(a) of the Buck Act provided that:
No person shall be relieved from liability for payment of, collection of, or accounting for any sales or use tax levied by any State, or by any duly constituted taxing authority therein, having jurisdiction to levy such a tax, on the ground that the sale or use, with respect to which such tax is levied, occurred in whole or in part within a Federal area; and such State or taxing authority shall have full jurisdiction and power to levy and collect any such tax in any Federal area within such State to the same extent and with the same effect as though such area was not a Federal area.
Consequently, the federal government could not assert immunity from sales and use tax simply because the transaction occurred in a Federal area. Section 107(a) of the Buck Act, however, limited § 105(a), which could not authorize a State in the, ****.
". . . levy or collection of any tax on or from the United States . . . ." Even in a federal area, therefore, the federal government would not be subject to state taxation where the legal incidence of the tax falls on it.
Based on this information, the Taxpayer sells egg products directly to the federal government. As the purchaser of these products, the legal incidence of tax clearly falls on the federal government. In this instance, the Supremacy Clause grants immunity to the federal government from state taxation even if the egg products are sold in a federal area. The federal government, consequently, is exempt from the Egg Excise Tax on its purchase of eggs, liquid eggs, or liquid equivalents. Additionally, the handler of such egg products is not required to collect the Egg Excise Tax.
I trust that this ruling has provided the information you requested. If further assistance is needed, please contact ***** of our Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20152N
Re: Request for Ruling: Virginia Egg Excise Tax
Dear ****
This is in reply to your letter concerning whether the egg products you (the "Taxpayer") sell to the federal government are subject to the Virginia Egg Excise Tax. I apologize for the delay in responding to your letter.
FACTS
The taxpayer, a food distributor, sells egg products to the federal government. You are requesting clarification on the requirements for collecting the Virginia Egg Excise Tax on the sale of egg products to the United States Government.
RULING
Code of Virginia § 3.1-796.11:3 provides, in pertinent part, that:
There is hereby levied on eggs purchased or sold for use or consumption in Virginia an excise tax of five cents per thirty-dozen case or, if the eggs are purchased or sold in other than shell form, eleven cents per hundred pounds of liquid eggs or liquid equivalent; however, such excise tax shall be levied only once.
Concerning a "handler of eggs," Code of Virginia § 3.1-796.11:4 provides, in pertinent part, that:
For the purpose of carrying out the provisions of this article, the handler shall collect the tax imposed by this article from the person who purchases eggs for use or consumption in Virginia and shall remit such tax or assessment to the Tax Commissioner ....
The term "handler" means any person who operates a grading station, a packer, huckster, distributor or other person who purchases, sells, or handles eggs that are used at the wholesale level for consumption in Virginia or a farmer who packs, processes or otherwise performs the functions of a handler. The term "handler" includes any person in Virginia who purchases eggs, or the liquid equivalent thereof, from anyone other than a "registered handler" for use or consumption at wholesale in Virginia.
As a result, a handler is required to collect the Egg Excise Tax from customers who purchase shell eggs, liquid eggs, or liquid equivalents for use in Virginia. The handler must remit the taxes collected to the department.
There is no general provision in Virginia law nor specific provision in Code of Virginia § 3.1-796.11:5 to exempt the federal government from the Egg Excise Tax. The Supremacy Clause of the United States Constitution, however, prohibits states from directly taxing the United States government its instrumentalities. (McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819.)) States do not have the power, by taxation or otherwise, to retard, impede, burden, or control the operations of the federal government. Additionally, if the legal incidence of the tax falls on the federal government, the federal government would be immune from state taxation under the Supremacy Clause.
The Buck Act of 1940 waived Federal immunity with respect to sales, use, and income taxes on certain activities occurring within Federal areas. Specifically, § 105(a) of the Buck Act provided that:
No person shall be relieved from liability for payment of, collection of, or accounting for any sales or use tax levied by any State, or by any duly constituted taxing authority therein, having jurisdiction to levy such a tax, on the ground that the sale or use, with respect to which such tax is levied, occurred in whole or in part within a Federal area; and such State or taxing authority shall have full jurisdiction and power to levy and collect any such tax in any Federal area within such State to the same extent and with the same effect as though such area was not a Federal area.
Consequently, the federal government could not assert immunity from sales and use tax simply because the transaction occurred in a Federal area. Section 107(a) of the Buck Act, however, limited § 105(a), which could not authorize a State in the, ****.
". . . levy or collection of any tax on or from the United States . . . ." Even in a federal area, therefore, the federal government would not be subject to state taxation where the legal incidence of the tax falls on it.
Based on this information, the Taxpayer sells egg products directly to the federal government. As the purchaser of these products, the legal incidence of tax clearly falls on the federal government. In this instance, the Supremacy Clause grants immunity to the federal government from state taxation even if the egg products are sold in a federal area. The federal government, consequently, is exempt from the Egg Excise Tax on its purchase of eggs, liquid eggs, or liquid equivalents. Additionally, the handler of such egg products is not required to collect the Egg Excise Tax.
I trust that this ruling has provided the information you requested. If further assistance is needed, please contact ***** of our Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20152N
Rulings of the Tax Commissioner