Tax Type
Retail Sales and Use Tax
Description
Used automobile warranties
Topic
Taxability of Persons and Transactions
Date Issued
04-03-1985
April 3, 1985
Re: §58.1-1821 Application: Sales and Use Tax
Dear ****
This will reply to your letter of February 27, 1985 on behalf of ***** doing business as ***** (Taxpayer) requesting reconsideration of our determination of February 22, 1985 in the above referenced case.
Facts
In connection with its sales of new and used cars, Taxpayer offers for sale (for a lump sum) mechanical breakdown protection coverage which varies in cost depending on the age or mileage of the vehicle sold, and the amount of deductibles the purchaser must pay. The protection so purchased is limited to "covered" breakdowns of specified parts and provides labor, repair parts, and certain amounts for road service and rental of a substitute vehicle. One of the protection plans offered for sale by Taxpayer is underwritten by *****, an affiliate of the ***** of *****, neither of which are registered with the Virginia Bureau of Insurance. Since Taxpayer has considered such sales to be sales of insurance, it has not collected sales tax on the sales price of such protection plans. In any case, Taxpayer argues, such transactions should be exempt from sales tax under §58.1-608(2) of the Virginia code.
Determination
Having carefully reviewed my previous determination and the contents of your letter dated February 27, 1985, I find no cause for correction of the assessment in this case.
The Virginia sales and use tax regulations regarding extended warranty plans cited in my previous determination, while only recently enacted, represent the codification of long standing departmental policies. Therefore, the policies set forth in such regulations would not have to be retroactive in effect to reach the facts in this case. I have enclosed copies of prior published determinations we have made based on facts similar to those presented here.
Nor would the fact that the protection plans sold by Taxpayer were backed up by liability insurance, issued by a company regulated by the Virginia Bureau of Insurance, qualify the transactions in the present case for the narrowly drawn exemption provided in §630-10-62.1(F) of the regulations.
Based on all of the above and my determination of February 22, 1985, I find no basis to adjust the audit in this case.
Sincerely,
W. H. Forst
Tax Commissioner
Enclosure
Re: §58.1-1821 Application: Sales and Use Tax
Dear ****
This will reply to your letter of February 27, 1985 on behalf of ***** doing business as ***** (Taxpayer) requesting reconsideration of our determination of February 22, 1985 in the above referenced case.
Facts
In connection with its sales of new and used cars, Taxpayer offers for sale (for a lump sum) mechanical breakdown protection coverage which varies in cost depending on the age or mileage of the vehicle sold, and the amount of deductibles the purchaser must pay. The protection so purchased is limited to "covered" breakdowns of specified parts and provides labor, repair parts, and certain amounts for road service and rental of a substitute vehicle. One of the protection plans offered for sale by Taxpayer is underwritten by *****, an affiliate of the ***** of *****, neither of which are registered with the Virginia Bureau of Insurance. Since Taxpayer has considered such sales to be sales of insurance, it has not collected sales tax on the sales price of such protection plans. In any case, Taxpayer argues, such transactions should be exempt from sales tax under §58.1-608(2) of the Virginia code.
Determination
Having carefully reviewed my previous determination and the contents of your letter dated February 27, 1985, I find no cause for correction of the assessment in this case.
The Virginia sales and use tax regulations regarding extended warranty plans cited in my previous determination, while only recently enacted, represent the codification of long standing departmental policies. Therefore, the policies set forth in such regulations would not have to be retroactive in effect to reach the facts in this case. I have enclosed copies of prior published determinations we have made based on facts similar to those presented here.
Nor would the fact that the protection plans sold by Taxpayer were backed up by liability insurance, issued by a company regulated by the Virginia Bureau of Insurance, qualify the transactions in the present case for the narrowly drawn exemption provided in §630-10-62.1(F) of the regulations.
Based on all of the above and my determination of February 22, 1985, I find no basis to adjust the audit in this case.
Sincerely,
W. H. Forst
Tax Commissioner
Enclosure
Rulings of the Tax Commissioner