Tax Type
Retail Sales and Use Tax
Description
Transitional provisions; Leases of tangible personal property
Topic
Rate of Tax
Taxability of Persons and Transactions
Date Issued
03-31-1987
March 31, 1987
Re: Request for Ruling/Sales and Use Tax
Dear**********************
This will reply to your letter of February 27, 1987, in which you request a ruling on the applicability of the 1/2 % sales and use tax rate increase to certain lease payments.
As noted in your letter, you represent a bank that is engaged in the leasing of equipment. In collecting lease payments, your client invoices each lessee one month in advance. In question here is an advance billing made on December 15, 1986 that covered the period from January 17, 1987 to February 17, 1987. The advance billing listed Virginia sales tax of 4 1/2 %,. however, the lessee has paid only a tax of 4 %, claiming that your client was not entitled to charge tax at the higher rate until after January 1, 1987, the effective date of the 1/2 % rate increase. You wish to determine whether the lessee is in fact required to remit the additional 1/2 % tax on the lease payment.
In the event that the lessee made his lease payment prior to January 1, 1987, he will only be liable for the 4 % sales tax as the delivery of the property and his payment both occurred before rate increase took effect. However, if the payment came on or after January 1, 1987, the 4 1/2 % tax applies inasmuch as the transaction was completed after the rate increase.
It should be noted that the lessee is entitled to a refund of the additional 1/2 % tax paid on or after January 1, 1987, provided that the lease was entered into before October 27. 1986, the date the sales and use tax rate increase was enacted. The procedures for obtaining such a refund are set forth in Emergency Virginia Regulation 630-10-106, §4, a copy of which is enclosed.
I trust that this will fully answer your question: however, please let us know if any further information is required.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner