Tax Type
Retail Sales and Use Tax
Description
Permission requested to hold a direct payment permit
Topic
Collection of Tax
Payment and Refund
Date Issued
12-19-2001
December 19, 2001
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This will reply to your letter of November 19, 2001 in which you request, on behalf of your client, ***** (the "Taxpayer"), permission to hold a direct payment permit (hereinafter "DPP").
FACTS
The Taxpayer and its affiliates comprise a number of insurance companies and investment firms. The Taxpayer maintains its headquarters and several business centers throughout the Commonwealth. The Taxpayer purchases and receives promotional materials that are stored in Virginia for subsequent distribution both within and outside Virginia. The Taxpayer concedes that promotional materials distributed inside Virginia are taxable, while those distributed outside Virginia are exempt.
The Taxpayer has recently implemented a new, highly mechanized use tax accrual system that accurately assigns a ship-to location on purchases, assigns the proper tax, and allocates the tax accruals to the proper locality. The Taxpayer is requesting authorization from the Tax Commissioner to utilize a DPP in making all purchases tax exempt and accruing the appropriate use tax to be paid with the filing of a DPP return.
RULING
Code of Virginia § 58.1-624 provides to the Tax Commissioner the authority to issue a DPP to a "manufacturer, mine operator, or public service corporation... or any person who stores tangible personal property in this Commonwealth for use both inside and outside this Commonwealth."
The department has also provided a mechanism for making tax-exempt purchases of promotional materials that are for distribution both inside and outside Virginia. Form ST-10A, copy enclosed, provides a purchaser with the means to make tax-exempt purchases for the following:
-
- Catalogs, letters, brochures, reports, and similar printed materials... when stored for twelve months or less in this state and distributed for use outside the state.
Use of this exemption certificate by the Taxpayer will allow the Taxpayer the ability to purchase all promotional materials tax-exempt and accrue use tax on those materials that remain in Virginia. This certificate may be duplicated by the Taxpayer and furnished to its suppliers of promotional materials. I trust that this exemption form will meet the desired needs of the Taxpayer.
If you or the Taxpayer should have any questions regarding this ruling, you may contact ***** in the Office of Policy and Administration, Policy Development, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
PD/37835K
Rulings of the Tax Commissioner