Retail Sales and Use Tax
Taxability of Persons and Transactions
October 31, 1988
Re: Request for Ruling: Retail Sales and Use Tax
This will reply to your letter dated September 11, 1988, in which you requested a ruling whether rabbit farmers qualify for the agricultural exemption from the sales and use tax.
The Taxpayer owns and operates a commercial rabbit farm and was recently charged sales tax on his purchases of feed. The Taxpayer asks whether the seller (dealer) correctly charged him the tax.
Virginia Code §58.1-608(3), provides an exemption from the tax for "[c]ommercial feeds...necessary for use in agricultural production for market...sold to or purchased by a farmer...." The department has consistently held that rabbit farming is not agricultural production for market. (See Commissioner's rulings dated July 31, 1973, and December 13, 1983, copies enclosed). As noted in the enclosed rulings, the agricultural exemption is limited to traditional "farm animals" (cattle, horses, pigs, sheep, chickens, turkeys, etc.). Rabbits, on the other hand, are not traditional farm animals as contemplated by the statute. Therefore, the dealer was correct in charging you sales tax on your purchases of rabbit feed.
The department's long standing policy is consistent with the rule or strict construction adopted by the Virginia courts in the interpretation of exemptions from the sales tax. Under this rule when a statute is subject to two interpretations, one granting the exemption and the other denying the exemption, the latter will be chosen. See Winchester TV Cable Co., v. State Tax Commissioner, 216 Va. 2869 217 S.E.2d 885 (1975). Based on the foregoing, I must conclude that rabbit farmers are not exempt under Virginia Code §58 1-608(3).
W. H. Forst