Tax Type
Retail Sales and Use Tax
Description
Purchase and lease of locomotives; Public service corporation
Topic
Exemptions
Date Issued
10-10-1984
October 10, 1984
Re: Ruling Request: Sales and Use Tax.
Dear ****
This will reply to your letter of July 3, 1984, concerning the applicability of sales and use tax to the purchase and lease of locomotives.
***** (the "Company") is a holding company with two operating subsidiaries, ***** and ***** and ***** (the "railway companies"). The Company proposes to purchase locomotives for lease to the railway companies for use in providing their railroad service.
Determination
Because of the resale exemption of §58-441.28 of the Code of Virginia, the Company would not be liable for sales and use tax on those locomotives it purchased for lease to the railway companies. Of course, the Company would be required to remit use tax on any locomotives purchased exempt from the tax which were not actually leased (or, for that matter, sold) to the railway companies or sold or leased to any entity.
The railway companies, as public service corporations engaged in business as common carriers of property or passengers by railway, would be exempt from sales and use tax for locomotives leased to them for their use or consumption directly in the rendition of their public service (Va. Code § 58-441.6(h)).
In light of the foregoing, there is no need to address the effect of Va. Code §58-441.6(n)).
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner