Tax Type
Retail Sales and Use Tax
Description
Equipment used within and without Virginia
Topic
Property Subject to Tax
Date Issued
05-25-1984
May 25, 1984
Re: Request for Ruling/Sales and Use Tax
Dear ***************
This will reply to your letter of April 27, 1984 in which you express your disagreement with my ruling of April 11, 1984 with respect to a certain item of equipment used by *****
While I understand your position completely, we feel that our policy in this matter is mandated by the laws of Virginia. Accordingly, I will restate and attempt to more fully explain our policy below.
As noted previously, § 58-441.5(a) of the Code of Virginia provides that "tangible personal property which has been acquired...for use outside this State and subsequently becomes subject to the (use) tax... shall be taxed on the basis...of the current market value...of such property at the time of its first use within this State." This statute sets forth the principle that the use tax is a moment of transaction tax, i.e. tax liability is incurred at the moment of first use in Virginia. Therefore, any exemption or deduction from tax is applicable at that moment of first use.
In this case, ***** brought a piece of equipment into Virginia and incurred a use tax liability based upon the current market value of the machine. If ***** had known at the time it imported that machine into Virginia the exact time it would be used in Virginia, it could rightly have obtained a partial tax exemption under Virginia Code § 58-441.5(a) which provides that the tax shall be prorated based upon the proportion of an item's use in Virginia to its total usage. However, ***** did not know, at the time that it imported the machine, what percentage of time such machine would be used in Virginia. Consequently, the use tax due at that time was rightfully based upon the current market value of the machine.
Even now that this item is again being used outside of Virginia after an eleven month stay here, we cannot prorate the tax paid because we have no way of knowing whether such machine will be returned to Virginia during its useful life. At the present, we have no convincing evidence to this effect.
Therefore, I must continue to deny a refund of a portion of the tax paid in this instance.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner