Tax Type
Retail Sales and Use Tax
Description
Photographic film sales; Sale deducted from agent commission
Topic
Taxability of Persons and Transactions
Date Issued
03-30-1987
March 30, 1987
Re: Request for Ruling/Sales and Use Tax
Dear ********************
This will reply to your letter of January 9, 1987, in which you request a ruling on the application of the sales and use tax to photographic film sold by your client to its commissioned agents.
FACTS
************* (Taxpayer) engages agents to take photographs and provides such agents with photographic equipment and supplies necessary for them to fulfill their duties, with the exception of photographic film which must be furnished by the agents themselves. In this regard, the taxpayer sells film to its agents for their use. The charge for the film from the taxpayer to its agents comes in the form of a deduction from the commissions earned by the agents.
Based on these facts, the taxpayer wishes to determine if it is the user or consumer of the film sold to its agents or whether such transactions constitute retail sales.
RULING
§58.1-603 of the Code of Virginia imposes a tax upon the sale of tangible personal property. The term "retail sale" is defined in §58.1-602.14 as "a sale to any person for any purpose other than for resale in the form of tangible personal property or services taxable under this chapter." As such, purchases for resale are generally not subject to the tax; instead, the tax is applied to the end purchaser, user or consumer.
In addition, the term "sale" is defined in §58.1-602.16 of the Code of Virginia as "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...for a consideration." Accordingly, the sales tax applies to virtually any type of transaction where the title to or possession of tangible personal property is transferred for a consideration.
As noted in Virginia Regulation 630-10-35.1, the sales tax applies even when an employer sells tangible personal property to an employee. Thus, an employer is not deemed to be the user or consumer of any tangible personal property purchased for resale to employees.
Based on the situation outlined in your letter, I find that the taxpayer is not the taxable user or consumer of the film used by its agents. Rather, the transactions between the taxpayer and its agents represent taxable sales in which either the title to or possession of the film is transferred to the agents for a consideration.
As such, the sales tax must be collected on all sales to the taxpayer's agents other than those sales that are exempt pursuant to Virginia Regulation 630-10-51 on interstate and foreign commerce.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner