Retail Sales and Use Tax
Llama breeding and sales
Taxability of Persons and Transactions
October 31, 1988
Re: Ruling Request/ Sales and Use Tax
This will reply to your letter of August 26, 1988 seeking reconsideration of the department's previous denial of a sales and use tax exemption for the breeding and sale of llamas.
By ruling dated May 20, 1988 the department determined that the breeding and sale of llamas did not qualify for the agricultural exemption in Virginia Code §58.1-608(3), since llamas did not constitute "livestock" for Purposes of the exemption.
The taxpayer seeks reconsideration of this ruling contending generally that llamas do meet the definition of "livestock" and that llamas should be given the same (tax exempt) treatment as more traditional farm livestock such as cattle, horses, hogs, sheep and goats.
According to the taxpayer while llamas are sometimes used as pets, they are also increasingly being raised for use as beasts of burden such as for packing and cart pulling, as well as for their fine wool, and in some limited instances for sale through gourmet food stores for human consumption.
For the reasons given in my May 20, 1988 letter to the taxpayer, I cannot agree that the exemption contained in Virginia Code §58.1-608(3) for tangible personal property necessary for use in agricultural production for market and sold to or purchased by a farmer, applies to llama breeders and sellers.
While domesticated animals, llamas are not livestock of the type customarily associated with agricultural production for market, such as cattle, horses, hogs, sheep, and goats. Under the legal maxim "noscitur a sociis" which translates "it is known from its associates," the meaning of a word takes color and expression from the purport of the entire phrase of which it is a part, and it must be read in harmony with its context. Turner v. Commonwealth, 226 Va. 456, 309 S.E. 2d 337 (1983). Under this maxim, the term "livestock" must be read in the context of the phrase "for agricultural production for market", which as previously stated was intended to apply to traditional farm animals, and not to any and all species of domesticated animals.
Furthermore, the fact that a llama's coat may be harvested for blending with wool, or that llamas may conceivably be raised for their meat is not conclusive, since non-traditional farm animals such as rabbits and mink are also not deemed to be exempt (see the documents enclosed with my May 20, 1988 ruling). In addition, while in some cases, llamas may be used as pack animals or to pull carts, these tasks are generally not performed in connection with farm work.
While I am not unappreciative of the new and profitable uses of llamas, based on the foregoing, and the long established rule of strict construction of all exempting statutes, I find no basis in existing law for extending the agricultural exemption to the breeding and sale of llamas.
I hope that the foregoing has responded to your question but let the department know if you have any further questions.
W. H. Forst