Tax Type
Retail Sales and Use Tax
Description
Dredging business
Topic
Taxability of Persons and Transactions
Date Issued
05-10-1988
May 10, 1988
Re: §58.1-1821 Application/Sales and Use Tax
Dear***********************
This will reply to your letter of January 25, 1988, in which you request reconsideration of my determination of January 4, 1988.
As noted in my letter of January 4, 1988, the department has traditionally interpreted the exemption contained in §58.1-608.11 of the Code of Virginia as applying to dredges and attendant vessels (such as barges upon which silt from the dredging process is loaded) when used in the dredging of channels or waterways used in interstate or foreign commerce.
Relief from the department's assessment was not provided, however, as your corporation failed to provide any evidence that the vessels in question were actually used in dredging activities. Even in the event that the vessels were actually used in dredging activities, your corporation further failed to show that the channel created by those activities was for use by vessels engaged in interstate or foreign commerce. In light of these circumstances, I must continue to conclude that the department's assessment is proper under the law and payable by your corporation.
I have enclosed for your review copies of several out-of-state court opinions on the issue of dredging. After reviewing these precedents, I am sure that you will agree that the department's policy in this regard is most reasonable. Further, I would note that the department's policy is equally applicable to instate and out-of-state businesses that perform dredging contracts within Virginia. Thus, had an out-of-state firm performed the contract in question, its barge rentals and purchases of supplies would also have been subject to the tax.
If after reviewing this letter and the enclosed court opinions you still desire a meeting, please contact the department's Tax Policy Division at P. O. Box 6-L, Richmond, Virginia 23282. The department with withhold collection activities for thirty days while you review this information.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner