Tax Type
Retail Sales and Use Tax
Description
Vineyard; Grass mowing equipment; Agricultural exemption
Topic
Exemptions
Property Subject to Tax
Date Issued
10-06-2000
October 6, 2000
Re: Ruling Request: Retail Sales and Use Tax
Dear ****
This is in reply to your letter in which you seek a ruling regarding the application of the retail sales tax to equipment used in grass mowing operations within your vineyards. I apologize for the delay in responding to your letter.
FACTS
* * * (the "Taxpayer") has purchased equipment that is used in agricultural activities. Based on the information provided, the equipment is used approximately 10% of the time to mow grass planted between rows of vines. The grass is considered a cover crop used to control the erosion of soil in which the vines have been planted. The Taxpayer has been advised that the mowing of grass is a taxable activity, and tax is due on that portion of the equipment equaling 10% of the value. You seek a reconsideration of this interpretation.
RULING
Code of Virginia § 58.1-609.2(1) provides an exemption from the retail sales and use tax for, among other things, farm machinery and agricultural supplies, provided they are 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 of a product for market. Based on the information before me, I agree that equipment used to mow grass grown as a cover crop to control soil erosion and affect the growth rate of the vines qualifies for exemption from the sales and use tax pursuant to Code of Virginia § 58.1-609.2(1).
I must caution the Taxpayer, however, that if the equipment is used in both exempt and nonexempt activities, only a partial exemption is allowed. The tax would be due on that prorated portion representing the nonexempt usage of the equipment. A taxable event would be the use of the equipment to mow grass in areas other than the vineyard rows. 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.
Based on the use of the mowing equipment as described in your letter, there is no tax due on the partial value of the equipment. If you should have any additional questions regarding this matter, please contact * * * of the department's Office of Tax Policy at * * *
Danny M. Payne
Tax Commissioner
Re: Ruling Request: Retail Sales and Use Tax
Dear ****
This is in reply to your letter in which you seek a ruling regarding the application of the retail sales tax to equipment used in grass mowing operations within your vineyards. I apologize for the delay in responding to your letter.
FACTS
* * * (the "Taxpayer") has purchased equipment that is used in agricultural activities. Based on the information provided, the equipment is used approximately 10% of the time to mow grass planted between rows of vines. The grass is considered a cover crop used to control the erosion of soil in which the vines have been planted. The Taxpayer has been advised that the mowing of grass is a taxable activity, and tax is due on that portion of the equipment equaling 10% of the value. You seek a reconsideration of this interpretation.
RULING
Code of Virginia § 58.1-609.2(1) provides an exemption from the retail sales and use tax for, among other things, farm machinery and agricultural supplies, provided they are 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 of a product for market. Based on the information before me, I agree that equipment used to mow grass grown as a cover crop to control soil erosion and affect the growth rate of the vines qualifies for exemption from the sales and use tax pursuant to Code of Virginia § 58.1-609.2(1).
I must caution the Taxpayer, however, that if the equipment is used in both exempt and nonexempt activities, only a partial exemption is allowed. The tax would be due on that prorated portion representing the nonexempt usage of the equipment. A taxable event would be the use of the equipment to mow grass in areas other than the vineyard rows. 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.
Based on the use of the mowing equipment as described in your letter, there is no tax due on the partial value of the equipment. If you should have any additional questions regarding this matter, please contact * * * of the department's Office of Tax Policy at * * *
Danny M. Payne
Tax Commissioner
Related Documents
Rulings of the Tax Commissioner