Tax Type
Retail Sales and Use Tax
Description
Occasional Sales;Construction Equipment
Topic
Exemptions
Date Issued
01-16-1986
January 16, 1986
Re: 58.1-1821 Application/Sales and Use Tax
Dear ****************
This will reply to your letter of December 3, 1985, in which you request the reconsideration of my October 21, 1985 determination with respect to sales of construction equipment by your corporation.
In my October 21, 1985 letter, the tax was deemed applicable to asphalt plant equipment sales by your corporation because the equipment was used in the course of an activity that required your corporation to register and collect the sales tax from its customers. Because the equipment was used to produce asphalt, a portion of which was sold to other consumers, the statutory "occasional sale" exemption did not apply.
You note in your recent letter, however, that construction equipment sold by your corporation was not used in the course of an activity requiring your corporation to register and collect the sales tax. As a contractor does not pass the sales tax on to his customers under the provisions of Section 630-10-27 of the Virginia Retail Sales and Use Tax Regulations, the performance of construction contracts is not an activity requiring registration to collect the tax. Therefore, the sale of tangible personal property used exclusively in contracting qualifies for the occasional sale exemption, provided that such sales are not sufficient in number to require the seller to register and collect the tax. In this regard, Section 630-10-75 of the Virginia Retail Sales and Use Tax Regulations states that "a sale by a person who is engaged in sales on three or fewer separate occasions within one calendar year" will not be required to register and collect the tax.
Based upon the foregoing, your corporation's sales of construction equipment may qualify for the occasional sale exemption. To qualify, however, your corporation must have made three or fewer sales per year of tangible personal property used exclusively in contracting.
I am forwarding a copy of this letter to the department's Technical Services Section so that it can be determined whether your corporation's sales activities were entitled to the occasional sale exemption. I have also forwarded to that section the copies of invoices you provided that show tax paid on purchases included in the department's audit sample. If found to be in order, such purchases will be removed from the sample and the audit assessment will be recomputed.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner