Tax Type
Watercraft Sales and Use Tax
Description
Sailing vessel charters
Topic
Collection of Tax
Exemptions
Date Issued
07-31-1986
July 31, 1986
Re: Request for Ruling/Watercraft Sales and Use Tax
Dear *********************
This will reply to your letter of June 24, 1986,-in which you wish to determine whether ********** will be required to register and collect the watercraft sales tax on its charters of sailing vessels.
As noted in your letter and a recent telephone conversation with a member of my staff, your association engages in the maintenance and chartering of privately owned vessels. Owners pay your association a monthly fee to maintain their vessels and in turn your association charters the vessels to other persons. Fees from the charter of a vessel are turned over to the vessel's owner, with your association retaining a percentage for its services.
Section 58.1-1402 of the Code of Virginia imposes the watercraft sales and use tax not only with respect to the sale or use of watercraft in Virginia, but also the lease or charter of watercraft by a registered dealer. The term "dealer" is defined in Virginia Code Section 58.1-1401 as:
any person who is in the regular business of selling watercraft. Any person who has held five or more watercraft for resale during the calendar year shall be deemed...a "dealer."
Based upon the foregoing, your association would not be required to register and collect the watercraft sales and use tax on its charter activities unless it qualifies as a "dealer" under Virginia Code Section 58.1-1401. As I understand that your association does not sell watercraft at retail, collection of the tax will apparently be unnecessary in this case.
I trust that this will answer the question posed in your letter, but please do not hesitate to contact the department if additional information is desired or if further questions arise. In addition, I have enclosed a copy of the Virginia Watercraft Sales and Use Tax Regulations for your information.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner