Tax Type
Retail Sales and Use Tax
Description
Sale;Trading of Scrap Metal
Topic
Taxability of Persons and Transactions
Date Issued
03-14-1985
March 14, 1985
Dear ****
This will reply to your letter of January 29, 1985 on behalf of your client requesting a ruling on the application of the Virginia retail sales and use tax to certain dental metal redemption transactions.
FACTS
Taxpayer is in the business of selling dental health products. Among the products it sells are precious dental alloys for use in prosthetic dentistry in the fabrication of crown and bridge devices. In order to obtain the necessary precious alloys, taxpayer maintains a residual dental metal redemption program, whereby it receives from its customers, various residual or scrap metals in exchange for one of the following: cash, credit to their account, new dental gold alloys, gold coins, or substitute merchandise or equipment. Taxpayer would like to know it if must collect the sales tax from its customers based on the value of the scrap exchanged.
DETERMINATION
Secs. 58.1-603 and 58.1-602(19) of the Virginia Code impose a sales tax on the retail sale of all tangible personal property in the state.
Subsection (16) of Sec. 58.1-602 states further that a "sale' means "any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property and any rendition of a taxable service for a consideration, and includes the fabrication of tangible personal property for consumers who furnish, either directly or indirectly, the materials used in fabrication . . .'
Sec. 630-10-33 of the Virginia Sales and Use Tax Regulations states, that "dentists are deemed to be consumers of all tangible personal property purchased for use in their practice.'
Therefore, according to the Regulations, "the tax applies to sales to a dentist by a dental laboratory or supplier of dentures, plates, braces and similar prosthetic devices, or the component parts thereof, unless such dentures, braces, etc. are purchased on behalf of a specific Patient.' Furthermore, "the tax applies to sales to a dentist of furnishings, equipment, tools and other dental supplies of any type.'
In the present case, taxpayers exchanges with its customers are sales of tangible personal property within the sales and use tax law. Therefore, taxpayer must collect and report the sales tax on the basis of the value of the merchandise and/or other commodities sold to such customers.
Furthermore, the exchanges described could not be construed to be non-taxable like-kind exchanges, or returns of merchandise, since the customers are not prohibited from exchanging scrap metals they receive from sources other than Taxpayer.
Therefore, based on all of the above, the exchanges described would require the collection and reporting of sales tax.
W. H. Forst
Tax Commissioner
Dear ****
This will reply to your letter of January 29, 1985 on behalf of your client requesting a ruling on the application of the Virginia retail sales and use tax to certain dental metal redemption transactions.
FACTS
Taxpayer is in the business of selling dental health products. Among the products it sells are precious dental alloys for use in prosthetic dentistry in the fabrication of crown and bridge devices. In order to obtain the necessary precious alloys, taxpayer maintains a residual dental metal redemption program, whereby it receives from its customers, various residual or scrap metals in exchange for one of the following: cash, credit to their account, new dental gold alloys, gold coins, or substitute merchandise or equipment. Taxpayer would like to know it if must collect the sales tax from its customers based on the value of the scrap exchanged.
DETERMINATION
Secs. 58.1-603 and 58.1-602(19) of the Virginia Code impose a sales tax on the retail sale of all tangible personal property in the state.
Subsection (16) of Sec. 58.1-602 states further that a "sale' means "any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property and any rendition of a taxable service for a consideration, and includes the fabrication of tangible personal property for consumers who furnish, either directly or indirectly, the materials used in fabrication . . .'
Sec. 630-10-33 of the Virginia Sales and Use Tax Regulations states, that "dentists are deemed to be consumers of all tangible personal property purchased for use in their practice.'
Therefore, according to the Regulations, "the tax applies to sales to a dentist by a dental laboratory or supplier of dentures, plates, braces and similar prosthetic devices, or the component parts thereof, unless such dentures, braces, etc. are purchased on behalf of a specific Patient.' Furthermore, "the tax applies to sales to a dentist of furnishings, equipment, tools and other dental supplies of any type.'
In the present case, taxpayers exchanges with its customers are sales of tangible personal property within the sales and use tax law. Therefore, taxpayer must collect and report the sales tax on the basis of the value of the merchandise and/or other commodities sold to such customers.
Furthermore, the exchanges described could not be construed to be non-taxable like-kind exchanges, or returns of merchandise, since the customers are not prohibited from exchanging scrap metals they receive from sources other than Taxpayer.
Therefore, based on all of the above, the exchanges described would require the collection and reporting of sales tax.
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner