Tax Type
Retail Sales and Use Tax
Description
Tax on the purchase of weed eaters and other small motorized equipment
Topic
Agricultural
Property Subject to Tax
Date Issued
05-10-2007
May 10, 2007
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This is in response to your letter submitted on behalf of ***** (the "Taxpayer") requesting a ruling on the application of the retail sales and use tax on the purchase of weed eaters and other small motorized equipment used by the Taxpayer at its Christmas tree farm. I apologize for the delay in responding to your correspondence.
FACTS
The Taxpayer operates a "cut your own" Christmas tree farm in Virginia. The Taxpayer represents that its purchases of equipment and other property for its business have always been exempt from the sales and use tax, and that its vendors have accepted exemption certificates in the past without question. Recently, one of the Taxpayer's vendors refused to sell a weed eater to the Taxpayer exempt of the tax. The vendor cites an auditor's interpretation of the agriculture exemption as its reason for not allowing the exempt sale.
RULING
Virginia Code § 58.1-609.2 1 provides, in pertinent part, that the retail sales and use tax does not apply to " . . . farm machinery; tangible personal property, except for structural construction materials to be affixed to real property owned or leased by a farmer, necessary for use in agricultural production for market and sold to and purchased by a farmer or contractor . . . ."
In Public Document (P.D.) 00-183 (10/6/00), the taxpayer requested a ruling regarding the application of tax on equipment purchased to mow grass planted between rows of vines. The grass was considered a cover crop used to control erosion of the soil in which the vines had been planted. The Tax Commissioner ruled that the equipment used to mow the grass grown as cover crop to control soil erosion and affect the growth rate of the vines qualified for the exemption provided in Va. Code § 58.1-609.2 1.
The Taxpayer maintains that the equipment at issue is used to prepare its Christmas tree fields for client visits. Pursuant to Va. Code § 58.1-609.2 1, the equipment at issue is not necessary for use in agricultural production for market, as required by statute. Unlike the property in P.D. 00-183, which was used to affect the growth rate of an agricultural product, the equipment in this instance is used by the Taxpayer to make its fields accessible by its clients for the purpose of purchasing a Christmas tree. This type of use is not one that is deemed necessary for use in agricultural production for market. Accordingly, the Taxpayer is required to remit the sales tax to its vendors at the time it purchases the equipment.
This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.
The Code of Virginia section and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this response, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/1-989193079P
Rulings of the Tax Commissioner