Tax Type
Retail Sales and Use Tax
Description
Exempt occasional sale
Topic
Exemptions
Tangible Personal Property
Date Issued
10-23-2009
October 23, 2009
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This will reply to your letter in which you seek correction of the retail sales and use tax assessment issued to ***** (the "Taxpayer") for the period May 2003 through April 2006. I apologize for the delay in responding to your appeal.
FACTS
By the terms of an Asset Purchase Agreement, the Taxpayer purchased the business assets of an asphalt company in Virginia (the "Seller"). The Taxpayer contends that it purchased in a single transaction substantially all of the tangible personal property that was used by the seller in its manufacturing and sale of asphalt. To this end, the Taxpayer maintains that the transaction at issue is an exempt occasional sale and the assessment should be revised accordingly.
DETERMINATION
Virginia Code § 58.1-609.10 2 provides that the retail sales and use tax is not imposed on an occasional sale, as defined in Va. Code § 58.1-602. The statute defines occasional sale as:
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- a sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially of any assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges significant in number, scope and character to constitute an activity requiring the holding of a certificate of registration.
The Asset Purchase Agreement provides that the seller sold to the taxpayer certain tangible personal property consisting of the asphalt plant, construction equipment, motor vehicles, office equipment and furniture, small tools and all remaining tangible and intangible assets of the asphalt operations. The agreement also provided that certain assets were excluded for the purpose of the Seller's establishment of operations dissimilar from that of the asphalt operations. According to Schedule L of the Seller's federal income tax return for 2005, the Seller sold approximately 80% of its total assets to the Taxpayer. Based on the documents presented, I find that the sale of the assets constitutes substantially all of the assets of the Seller and that the transaction qualifies as an exempt occasional sale. Accordingly, the balance of the Department's assessment will be abated.
The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. If you have any questions about this determination, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Janie E. Bowen
Tax Commissioner
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AR/1-1222242296.Q
Rulings of the Tax Commissioner