Tax Type
Retail Sales and Use Tax
Description
Computer used in software development and production
Topic
Taxability of Persons and Transactions
Date Issued
08-26-1986
August 26, 1986
Re: §58.1-1821 Application/Sales and Use Tax
Dear*****************
This will reply to ************* letter of February 17, 1986 and your letter of April 18, 1986, in which you submit an application for relief of sales and use tax assessed to**********as the result of a recent audit.
It is noted in your letters that you are engaged in the operation of a recording studio. A recent audit of your business produced an assessment for the failure to collect the sales tax on certain charges made to customers for the production of recordings. You contest this assessment, however, noting that conflicting information on the taxability of such charges has been received by the Virginia recording industry.
Inasmuch as there has been considerable confusion in the recording industry due to conflicting information, I find basis in this instance for waiving that portion of the assessment that relates to studio service charges. For the future, however, you will be expected to collect the tax on such charges when your personnel produce recordings for customers. To give you additional guidance, I have enclosed copies of two recent determination letters dealing with the collection of tax by recording studios. Both letters involve the same studio, with the latter letter addressing in some detail when collection of the tax on studio service charges is required and when it is not required.
Based upon the foregoing, the assessment issued to your business will be revised as soon as practicable. In addition, please do not hesitate to contact the department if any further questions arise on the application of the tax to recording studio charges.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner