Tax Type
Retail Sales and Use Tax
Description
Photo lab equipment; Retail film processing
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
10-10-1984
October 10. 1984
Re: Request for Ruling/Sales and Use Tax
Dear *******
This will reply to your letter of July 20, 1984, in which you submit a request for a ruling on the applicability of the sales and use tax to the purchase of photo developing equipment by *****.
***** (hereinafter *****) is engaged in the operation of a retail film processing and photography studio and has recently purchased photo development equipment for use in the business. asserts that such photo development equipment is exempt from the sales and use tax under the provisions of Virginia Retail Sales and Use Tax Regulation 1-63.
Regulation 1-63 interprets §58-441.6 of the Code of Virginia which provides an exemption from the sale and use tax for "machinery... used directly in processing... (or) manufacturing... products for sale or resale." The Virginia Supreme Court has interpreted the exemption above to be applicable only to industrial processors or manufacturers of products for sale or resale, Golden Skillet Corporation v. Commonwealth, 214 Va. 276, 199 S.E.2d 511 (1973). Virginia Code §58-441.3(p) in turn gives guidance as to what processors or manufacturers should be deemed industrial in nature, stating that such establishments "shall include, but not be limited to, those businesses classified in Codes 10 through 14 and 20 through 39 published in the Standard Industrial Classification Manual."
The department has traditionally deemed photography and photo development to be non-industrial service trades, thus making such trades ineligible for the industrial processing or manufacturing exemption. This policy is supported by the Standard Industrial Classification Manual. A review of that manual reveals that neither trade is included in Codes 10-14 or 20-39. Rather, photographic studios are included in Code 72, Personal Services and photo finishing labs are included in Code 73, Business Services.
Based upon the foregoing, I must conclude that the photo developing equipment purchased by ***** is not entitled to exemption under Virginia Retail Sales and Use Tax Regulation 1-63.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner