Tax Type
Retail Sales and Use Tax
Description
Motor vehicles with a GVWR or GCWR of 26,001 pounds or more qualify for exemption
Topic
Exemptions
Motor Vehicle Repair Labor and Severice
Date Issued
03-19-2012
March 19, 2012
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in response to your letter submitted on behalf of ***** (the "Taxpayer"), in which you seek correction of a retail sales and use tax assessment issued for the period December 2004 through November 2007. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer provides services for all types of well construction, and water pump and water filtration system installation service and repair. In addition, the Taxpayer provides specialty drilling for construction foundations, soil investigations and geothermal requirements. At issue is the tax assessed on the purchase of a well drilling vehicle used in the Taxpayer's business operations. The auditor relied on Title 23 of the Virginia Administrative Code (VAC) 10-210-990 as a basis for the assessment.
The Taxpayer contests the assessment and claims the drilling truck is a motor vehicle as defined in Va. Code § 58.1-2401 and is licensed by the Department of Motor Vehicles (DMV) to operate on the highways in the Commonwealth. As such, the Taxpayer contends the well drilling truck is not subject to the retail sales and use tax, notwithstanding the fact that the well drilling truck qualifies for exemption from the motor vehicle sales and use tax pursuant to Va. Code § 58.1-2402.
DETERMINATION
Va. Code § 58.1-609.1 2 exempts motor vehicles, trailers, semitrailers, mobile homes and travel trailers from the retail sales and use tax. For purposes of the retail sales and use tax, "motor vehicle" is defined in Va. Code § 58.1-602 as:
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- a "motor vehicle" as defined in § 58.1-2401, taxable under the provisions of the Virginia Motor Vehicle Sales and Use Tax Act (§ 58.1-2400 et seq.) and upon the sale of which all applicable motor vehicle sales and use taxes have been paid.
Effective July 1, 1997, Cods of Virginia §§ 58.1-2402 and 58.1-2403 were amended to provide an exemption from the motor vehicle sales and use tax for motor vehicles with a gross vehicle weight rating (GVWR) or gross combination weight rating (GCWR) of 26,001 pounds or more. However, in Public Document 97-482, the Tax Commissioner held that these statutory amendments were not intended to replace the motor vehicle sales and use tax with the retail sales and use tax on motor vehicles that have a GVWR or GCWR of 26,001 pounds or more.
Legislation was enacted in the 2011 General Assembly Session (House Bill 1945) to clarify the intent of the law regarding the exemption of motor vehicles with a GVWR or GCWR of 26,001 or more. House Bill 1945 amends Va. Code § 58.1-2402 by adding subsection 7, which will levy the motor vehicle sales and use tax at zero percent of the sales price of each truck, tractor trailer, or semitrailer with a GVWR or GCWR of 26,001 pounds or more sold, used, or stored for use in the Commonwealth. This legislation codifies TAX's policy of not imposing the retail and sales and use tax on the sale, lease or rental of such motor vehicles. As such, motor vehicles with a GVWR or GCWR of 26,001 pounds or more continue to qualify for exemption from the retail sales and use tax pursuant to Va. Code § 58.1-609.1 2. Accordingly, the retail sales tax assessed on the contested well drilling truck will be removed from the audit.
CONCLUSION
The Taxpayer has paid the uncontested portion of the audit assessment. The remaining balance of the bill represents the tax and interest assessed on the contested well drilling truck. Based on the above determination, the Department will abate the remaining outstanding balance of the bill.
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 web site. If you have any questions about this determination, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-2739931208.T
Rulings of the Tax Commissioner