Tax Type
Retail Sales and Use Tax
Description
Independent timber procurer for consuming paper mills and sawmills
Topic
Accounting Periods and Methods
Appropriateness of Audit Methodology
Date Issued
10-13-1982
October 13, 1982
Re: 58-1118-Application/Use Tax
Dear ********
This responds to the application of May 24, 1982, by **************** ., petitioning for correction of a use tax assessment dated September 30, 1981, covering the period October 1, 1979 through July 31, 1981. The company has paid the $**** use tax, plus $***** interest, under protest.
FACTS
******** is an independent timber procurer for consuming paper mills and sawmills. Pulpwood and sawlogs are brought into the company's wood yard located near ***** where they are unloaded, sorted, trimmed and shipped out. ******* has a railroad siding which it uses to load and unload lumber purchased from loggers. ******* does not do any harvesting or manufacturing of forest products itself. However, sometimes its loading equipment is sent to assist the forest operations of harvesters with whom ******* has contracted for timber.
********* purchased certain loading equipment tax exempt, claiming exemption as a manufacturer or a harvester of forest products. The department assessed a use tax deficiency on this equipment, and paid under protest.
DETERMINATION
Since ******* loading equipment is not used directly in the manufacturing or processing of wood products nor used directly in the harvesting of forest products, the purchase or use of such equipment is not exempt from sales and use tax under § 58-441.6 of the Code of Virginia and the Sales and Use Tax Regulations of the department issued thereunder. ********* business goes no further than procuring timber for the manufacturer and does not itself involve an integrated manufacturing process, i.e., all the steps from the handling and storage of raw materials at the plant site through the last step of production where the product is finished or completed for sale.
Nor does****** business extend to harvesting of forest products, i.e., such as that performed by the loggers with whom *****contracts for timber. Although **** loading equipment may sometimes be used at the site of the loggers' harvesting operations, the equipment is not thereby being used directly in the harvesting since ***** is not in the logging operation.
*********** being neither manufacturer nor harvester, is rendered a middleman for whose equipment no exemption applies under the Sales and Use Tax Act. There is no basis, therefore, for granting relief from the use tax assessment which********* has paid in full.
If you have any further questions, please do not hesitate to contact me.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner