Tax Type
Retail Sales and Use Tax
Description
Business breeding canines for resale to the pharmaceutical industry
Topic
Agricultural
Exemptions
Date Issued
03-31-2009
March 31, 2009
Re: Request for Ruling
Retail Sales and Use Tax
Dear *****:
This will reply to your letter in which you request a ruling regarding the application of the retail sales and use tax to activities engaged in by your company (the "Taxpayer").
FACTS
You represent that the Taxpayer has a facility located in Virginia. The Taxpayer is in the business of breeding canines for resale to the pharmaceutical industry. All sales are to companies that provide tax exemption certificates. The majority of the Taxpayer's customers request canines that must meet their specific needs (gender, weight, blood type and age).
You ask if certain purchases (feed, medicines and vaccines) can be purchased exempt of the retail sales and use tax pursuant to the agricultural exemption provided in Va. Code § 58.1-609.2 1 or any other exemption.
RULING
Virginia Code § 58.1-609.2 1 exempts from the retail sales and use tax:
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- Commercial feeds . . . breeding and other livestock; . . . baby chicks; turkey poults; rabbits; quail; llamas; bees; . . . medicines and drugs sold to a veterinarian provided they are used or consumed directly in the care, medication, and treatment of agricultural production animals or for resale to a farmer for direct use in producing an agricultural product for market; . . . and agricultural supplies provided the same are sold to and purchased by farmers for use in agricultural production, which also includes beekeeping and fish, quail, rabbit and worm farming for market.
As explained in Public Document 94-152 (05/16/94), inasmuch as the Code of Virginia provides a comprehensive definition of "livestock," that same definition is applied to the agricultural exemption set forth in the sales and use tax laws. Virginia Code § 3.2-6500 (derived from former § 3.1-796.66) of the Comprehensive Animal Care Act defines "livestock" to include:
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- all domestic or domesticated: bovine animals; equine animals; ovine animals; porcine animals; cervidae animals; capradae animals; animals of the genus Lama; ratites; fish or shellfish in aquaculture facilities, as defined in § 3.2-2600; enclosed domesticated rabbits or hares raised for human for or fiber; or any other individual animal specifically raised for food or fiber, except companion animals.
In order to qualify for the exemption pursuant to Va. Code § 58.1-609.2 1, two criteria must be met: (1) a farmer must be engaged in the raising of crops, livestock (as defined in Virginia Code § 3.2-6500) or other specified farming activities such as quail or worm farming; and (2) exempt purchases must be used by the farmer in agricultural production for market.
Based on the information provided, the Taxpayer does not meet the criteria for exemption. First, it is not clear that the Taxpayer is a farmer. Even if the Taxpayer is considered a farmer, it is not engaged in raising crops, livestock (as defined in Virginia Code § 3.2-6500) or the other specified farming activities. In addition, the information provided indicates the medicines and vaccines are sold to the Taxpayer and not to a veterinarian, as required by the statute to qualify for the exemption. Accordingly, the agricultural exemption in Va. Code § 58.1-609.2 1 is not available for the Taxpayer's purchases of feed, medicines or vaccines. Furthermore, based on the facts presented, no other exemption in the Retail Sales and Use Tax Act is applicable to these purchases.
The Code of Virginia sections 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 regarding this ruling, you may contact the Appeals and Rulings unit at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/1-2994753394
Rulings of the Tax Commissioner