Tax Type
Retail Sales and Use Tax
Description
Fuel oil sales; Fuel for domestic consumption
Topic
Taxability of Persons and Transactions
Date Issued
06-20-1985
June 20, 1985
Re: Ruling Request/Sales and Use Tax
Dear ****
This will reply to your letter of April 30, 1985 on behalf of ***** (Taxpayer), seeking clarification of the Virginia Sales and Use Tax Regulations in a variety of transactions. The transactions as stated in your letter are as follows:
(1) A son requests that we send him the bill for heating oil delivered to his aged mother's residence.
(2) A church requests that the fuel bill for heating the pastor's residence be sent to the church office.
(3) A business owner requests that we send the bill for his home heating oil to his business address for personal accounting convenience
(4) An owner of rental property requests that the oil account of a tenant be kept in the owner's name for continuity of service purposes, although the tenant reimburses the owner directly for such oil used by the tenant.
§ 58.1-608(9) of the Virginia Code provides an exemption from sales and use tax for "artificial or propane gas, firewood, coal or home heating oil used for domestic consumption." Domestic consumption is then defined as "the use of artificial or propane gas, etc...by an individual purchaser for other than business, commercial or industrial purposes." Furthermore, the taxability of fuel purchased will be determined by its actual usage. See, § 630-10-40.2(C), Virginia Sales and Use Tax Regulations.
The first example presented in your letter would meet the definition of domestic consumption, and therefore be exempt from the sales and use tax. See generally, § 630-10-40.2(B) of the Regulations.
The second example presented would similarly qualify as "domestic consumption" only if the fuel is being purchased for use in the pastor's home, and is actually being paid for by the pastor.
The third example would also qualify as domestic consumption provided there is no business or commercial advantage received by the purchaser from having the fuel bill sent to his place of business.
However, the fourth example presented would not qualify as domestic consumption so long as the account is in the name of the owner, notwithstanding full reimbursement by the tenant for all such amounts paid by the owner.
§ 630-10-40.2(B) of the Sales and Use Tax Regulations states that "the renting or leasing of residential units is considered commercial usage." Furthermore, "The term domestic consumption does not include purchases by... (5) lessors of apartments, trailer courts, condominiums, rooming houses or other multi-family dwellings." The transaction is not exempt in this instance since the billing arrangement is for the business convenience of the owner, even though he derives no tangible benefit from the arrangement. In order for this transaction to qualify as exempt - domestic consumption, the account would have to be in the name of the tenant.
It should also be noted that in order to be certain that any given transaction qualifies as "domestic consumption," the dealer should have a Certificate of Exemption, Form ST-15, on file for each such transaction. § 630-10-40.2(D) of the Regulations states, "A purchaser need file only one such certificate with a dealer to qualify for exemption. However, the certificate will be valid only for purchases of fuel made by the person named on the certificate and for use at his residence, the address of which is also listed on the certificate. Any change of address of purchaser will require completion of a new certificate of exemption." Furthermore, "A dealer is not required to obtain a certificate of exemption for each transaction if the record of the sale is clearly identifiable as a sale of fuel for domestic consumption. However, this should not be construed as altering the fact that the burden of proof is on the dealer to demonstrate that each untaxed transaction is legitimately exempt from the tax.
I hope that all of the above has been helpful to you, but please let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Re: Ruling Request/Sales and Use Tax
Dear ****
This will reply to your letter of April 30, 1985 on behalf of ***** (Taxpayer), seeking clarification of the Virginia Sales and Use Tax Regulations in a variety of transactions. The transactions as stated in your letter are as follows:
(1) A son requests that we send him the bill for heating oil delivered to his aged mother's residence.
(2) A church requests that the fuel bill for heating the pastor's residence be sent to the church office.
(3) A business owner requests that we send the bill for his home heating oil to his business address for personal accounting convenience
(4) An owner of rental property requests that the oil account of a tenant be kept in the owner's name for continuity of service purposes, although the tenant reimburses the owner directly for such oil used by the tenant.
§ 58.1-608(9) of the Virginia Code provides an exemption from sales and use tax for "artificial or propane gas, firewood, coal or home heating oil used for domestic consumption." Domestic consumption is then defined as "the use of artificial or propane gas, etc...by an individual purchaser for other than business, commercial or industrial purposes." Furthermore, the taxability of fuel purchased will be determined by its actual usage. See, § 630-10-40.2(C), Virginia Sales and Use Tax Regulations.
The first example presented in your letter would meet the definition of domestic consumption, and therefore be exempt from the sales and use tax. See generally, § 630-10-40.2(B) of the Regulations.
The second example presented would similarly qualify as "domestic consumption" only if the fuel is being purchased for use in the pastor's home, and is actually being paid for by the pastor.
The third example would also qualify as domestic consumption provided there is no business or commercial advantage received by the purchaser from having the fuel bill sent to his place of business.
However, the fourth example presented would not qualify as domestic consumption so long as the account is in the name of the owner, notwithstanding full reimbursement by the tenant for all such amounts paid by the owner.
§ 630-10-40.2(B) of the Sales and Use Tax Regulations states that "the renting or leasing of residential units is considered commercial usage." Furthermore, "The term domestic consumption does not include purchases by... (5) lessors of apartments, trailer courts, condominiums, rooming houses or other multi-family dwellings." The transaction is not exempt in this instance since the billing arrangement is for the business convenience of the owner, even though he derives no tangible benefit from the arrangement. In order for this transaction to qualify as exempt - domestic consumption, the account would have to be in the name of the tenant.
It should also be noted that in order to be certain that any given transaction qualifies as "domestic consumption," the dealer should have a Certificate of Exemption, Form ST-15, on file for each such transaction. § 630-10-40.2(D) of the Regulations states, "A purchaser need file only one such certificate with a dealer to qualify for exemption. However, the certificate will be valid only for purchases of fuel made by the person named on the certificate and for use at his residence, the address of which is also listed on the certificate. Any change of address of purchaser will require completion of a new certificate of exemption." Furthermore, "A dealer is not required to obtain a certificate of exemption for each transaction if the record of the sale is clearly identifiable as a sale of fuel for domestic consumption. However, this should not be construed as altering the fact that the burden of proof is on the dealer to demonstrate that each untaxed transaction is legitimately exempt from the tax.
I hope that all of the above has been helpful to you, but please let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner