Tax Type
Retail Sales and Use Tax
Description
Food cooperatives
Topic
Collection of Tax
Date Issued
09-07-1984
September 7, 1984
Re: Request for Ruling/Sales and Use Tax
Dear *******
This will reply to your letter of June 11, 1984 to ***** of our ***** District Office in which you request a ruling on the application of the sales tax to purchases made by pre-order food cooperatives.
§ 58-441.17(a) of the Code of Virginia provides that "all sales or leases are subject to the (sales) tax until the contrary is established. The burden of proving that a sale... is not taxable is upon the person who makes the sale... unless he takes from the purchaser... a certificate to the effect that the property is exempt." Therefore, ***** should collect and remit the sales tax on all transactions with Virginia buyers unless such buyers provide a certificate of exemption.
Based upon your description though, it would appear that at least some of the pre-order food cooperatives with which ***** deals are retailers. Therefore, such cooperatives are entitled to purchase items from exclusive of the sales tax since such items will in turn be resold.
In order for a cooperative to purchase items on a tax exempt basis, it must first register with the Department of Taxation to collect the sales tax on sales to its members. Upon doing so, the cooperative will be provided resale exemption certificates, a copy of which should be provided to *****.
After placing such a certificate on file once, will not be required to collect tax from that cooperative. However, as noted previously the failure of a cooperative to present a certificate of exemption will subject all sales to that cooperative to the tax.
Normally, the department has required food cooperatives to register to collect and remit the tax only when a charge is made to customers or members that is greater than the wholesale cost of the goods sold. Cooperatives which only charge customers or members for the wholesale cost of goods they order may register to collect and remit the tax, but are not required to do so.
I hope that this answers your questions. Please contact us if further information is desired.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner