Tax Type
Retail Sales and Use Tax
Description
Lifting equipment; Public utility
Topic
Taxability of Persons and Transactions
Date Issued
05-15-2000
May 15, 2000
Re: Ruling Request: Retail Sales and Use Tax
Dear ****
This is in reply to your letter of March 17, 2000, in which you seek clarification regarding the application of the retail sales and use tax to lifting equipment used at a power plant facility.
FACTS
The Taxpayer seeks a ruling on the application of the tax to hoists, cranes, and forklifts when used in a repair and maintenance capacity at a public service corporation power station. You also question the taxability of the same equipment used in the repair and maintenance of exempt power plant facilities.
RULING
Virginia Code § 58.1-609(3)(1) provides an exemption from the sales and use tax for "tangible personal property sold or leased to a public service corporation subject to a state franchise or license tax upon gross receipts..., for use or consumption by such corporation,... directly in the rendition of its public service."
The above statute clearly states that tangible personal property must be used directly in the rendition of a utility's public service in order to qualify for the exemption. In interpreting the statute, Virginia Administration Code (VAC) 10-210-3020 (D) provides:
Direct usage refers to those activities that are an integral part of the rendition of a public utility service, including all steps of a utility's production, generation of initiation process as well as a utility's transmission or distribution process, but not including incidental public utility functions such as administration and management.
Section F of VAC 10-210-3020 specifically addresses production activities and repairs to the production system and provides that equipment, machinery, supplies, tools, and repair parts used to keep in operation exempt production devices is exempt from sales and use tax.
The power station system is used in a utility's production/generation process. Items of tangible personal property which are to be incorporated into and will become a part of the utility's production process are deemed to be used directly in the rendition of a public service and are exempt from the tax. To the extent that hoists, cranes, and forklifts are used in the repair and maintenance of exempt production equipment, such items qualify for the exemption under VAC 10-210-3020 (F). Such items are taxable when used in other general activities such as loading and unloading trucks and moving of items at the plant site.
For a specific ruling on the taxability of the items in question, the Taxpayer will need to provide information on the actual use of each item. If you should have any further questions, please feel free to contact the department.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/27878T
Re: Ruling Request: Retail Sales and Use Tax
Dear ****
This is in reply to your letter of March 17, 2000, in which you seek clarification regarding the application of the retail sales and use tax to lifting equipment used at a power plant facility.
FACTS
The Taxpayer seeks a ruling on the application of the tax to hoists, cranes, and forklifts when used in a repair and maintenance capacity at a public service corporation power station. You also question the taxability of the same equipment used in the repair and maintenance of exempt power plant facilities.
RULING
Virginia Code § 58.1-609(3)(1) provides an exemption from the sales and use tax for "tangible personal property sold or leased to a public service corporation subject to a state franchise or license tax upon gross receipts..., for use or consumption by such corporation,... directly in the rendition of its public service."
The above statute clearly states that tangible personal property must be used directly in the rendition of a utility's public service in order to qualify for the exemption. In interpreting the statute, Virginia Administration Code (VAC) 10-210-3020 (D) provides:
Direct usage refers to those activities that are an integral part of the rendition of a public utility service, including all steps of a utility's production, generation of initiation process as well as a utility's transmission or distribution process, but not including incidental public utility functions such as administration and management.
Section F of VAC 10-210-3020 specifically addresses production activities and repairs to the production system and provides that equipment, machinery, supplies, tools, and repair parts used to keep in operation exempt production devices is exempt from sales and use tax.
The power station system is used in a utility's production/generation process. Items of tangible personal property which are to be incorporated into and will become a part of the utility's production process are deemed to be used directly in the rendition of a public service and are exempt from the tax. To the extent that hoists, cranes, and forklifts are used in the repair and maintenance of exempt production equipment, such items qualify for the exemption under VAC 10-210-3020 (F). Such items are taxable when used in other general activities such as loading and unloading trucks and moving of items at the plant site.
For a specific ruling on the taxability of the items in question, the Taxpayer will need to provide information on the actual use of each item. If you should have any further questions, please feel free to contact the department.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/27878T
Rulings of the Tax Commissioner