Tax Type
Retail Sales and Use Tax
Description
Sale of Blank Video Tapes to Producers
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
10-05-2001
October 5, 2001
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This is in response to your letter of August 21, 2001, concerning the application of the retail sales and use tax to certain items sold by ***** (the "Taxpayer"). These items, primarily blank audio and video tapes, are sold to producers for their use in creating original programming.
The Audiovisual Exemption
The 1995 Virginia General Assembly enacted Code of Virginia § 58.1-609.6(6) to exempt from the retail sales and use tax:
a. (i) The lease, rental, license, sale, other transfer, or use of any audio or video tape, film or other audiovisual work where the transferee or user acquires or has acquired the work for the purpose of licensing, distributing, broadcasting, commercially exhibiting or reproducing the work or using or incorporating the work into another such work; (ii) the provision of production services or fabrication in connection with the production of any portion of such audiovisual work, including, but not limited to, scriptwriting, photography, sound, musical composition, special effects, animation, adaptation, dubbing, mixing, editing, cutting and provision of production facilities or equipment; or (iii) the transfer or use of tangible personal property, including, but not limited to, scripts, musical scores, storyboards, artwork, film, tapes and other media, incident to the performance of such services or fabrication; however, audiovisual works and incidental tangible personal property described in clauses (i) and (iii) of this subsection shall be subject to tax as otherwise provided in this chapter to the extent of the value of their tangible components prior to their use in the production of any audiovisual work and prior to their enhancement by any production service; and
b. Equipment and parts and accessories thereto used or to be used in the production of such audiovisual works. (Emphasis added.)
Based on the information provided in your letter, the Taxpayer's customers are producers creating audiovisual works that qualify for this exemption. Accordingly, the Taxpayer may sell audiovisual tapes to these producers exempt of the tax. To document these nontaxable sales, the Taxpayer needs to have on file from its exempt customers a Sales and Use Tax Certificate of Exemption, Form ST-20A. I have enclosed some of these, and the Taxpayer may give them to its exempt customers to be filled out and signed, as warranted. Additional copies of Form ST-20A may be photocopied or ordered from the department's website at www.tax.state.va.us.
The clear intent of this statute is to encourage film production in Virginia. However, the exemption does not apply to all audiovisual works, but only to those intended for licensure, distribution, broadcast, commercial exhibition or reproduction. Examples of such exempt works are shown on the enclosed guidelines that the department prepared in response to this audiovisual exemption. I have also enclosed Public Document 95-198 (7/31/95) and Virginia Tax Bulletin 95-5, which address the audiovisual exemption.
I trust that this information addresses your concerns. If you need additional information, please contact ***** in the department's Office of Policy and Administration, Appeals and Rulings, at ***** or at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
ARO/36525I
Rulings of the Tax Commissioner