Tax Type
Retail Sales and Use Tax
Description
Sale of gasoline service stations
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
02-09-1987
February 9, 1987
Re: §58.1-1821 Application/Sales and Use Tax
Dear*********************
This will reply to your letters of November 19, 1985 and January 20, 1986, in which you submit an application for correction or sales and use tax assessed to ************* as the result of an audit.
FACTS
************* (Taxpayer) is engaged primarily as a fuel wholesaler or "jobber" supplying fuel to various retailers. As part of this business activity, the taxpayer makes some retail sales of fuel for which it is registered for the collection of the sales tax. In addition, the taxpayer owned several self-service gasoline stations which were leased to independent operators.
As the result of litigation between the taxpayer and its national fuel supplier, the taxpayer transferred the ownership of the self-service gasoline stations to the national supplier and received a settlement. An audit of the taxpayer produced an assessment for its failure to collect and remit the sales tax from its national supplier on the tangible personal property transferred along with the stations in the settlement.
The taxpayer contests the above assessment. contending that the transfer of its stations represented an exempt occasional sale.
DETERMINATION
§58.1-608.15 of the Code of Virginia exempts "[a]n occasional sale" from the sales and use tax. The term "occasional sale" is defined in §58.1-602.12 of the Code of Virginia as "a sale of tangible personal property not held or used by the seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all of the assets of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope, and character to constitute an activity requiring the holding of a certificate of registration."
In analyzing the above statute, it becomes apparent that to qualify for the exemption a sale must meet two primary tests. First, the tangible personal property sold cannot be held or used by the seller in the course of an activity requiring him to register to collect the sales tax, and second, the sale must be isolated in nature and not one of a series of sales that would require the seller to register for collection of the tax.
In this case, we are concerned with a single transaction in which several gasoline stations owned by the taxpayer were sold so the taxpayer's national fuel supplier. According to the taxpayer, it did not operate the stations, but leased them to independent operators. The taxpayer did act as the fuel supplier to the independent operators, however.
As the leasing of gasoline stations (the leasing of real estate) is an activity that would not require the taxpayer to register for collection of the tax, based upon the facts presented by the taxpayer the first test for exemption is met. Also, since the sale of the gasoline stations was in the form of a single transaction, rather than a series of sales sufficient to require registration and tax collection, the second test for exemption is met.
Therefore, based upon the facts presented, the department s audit will be revised to delete the tax assessed on the sale of the instant gasoline stations. As the assessment has already been paid by the taxpayer, a refund (with accrued interest) will be issued as soon as practicable.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner