Tax Type
Retail Sales and Use Tax
Description
Hunting preserve provision fees
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
04-28-1989
April 28, 1989
Re: Request for Ruling: Retail Sales and Use Tax
Dear*****************
This will reply to your letter dated March 1, 1989, in which you requested a ruling on the application of the sales and use tax to your organization.
FACTS
********* ("The Taxpayer") is a shooting preserve for hunters. For a set fee per hunter, the Taxpayer will release 4 pheasants which the hunter may or may not shoot during his hunt. For an additional fee, the Taxpayer will provide the hunter with a guide and a bird dog. The Taxpayer requests a ruling on the application of the tax to these transactions.
RULING
§58.1-603 of the Virginia Code imposes a sales tax "upon every person who engages in the business of selling...or distributing tangible personal property in this Commonwealth...." Virginia Code §58.1-608(2), provides an exemption from the sales and use tax for "personal service transactions which involve sales as inconsequential elements for which no separate charges are made...."
The decisive issue in this case is whether providing pheasants, guides and bird dogs to hunters is a service exempt from the tax or whether there is a sale of tangible personal property subject to the tax. §630-10-97.1(B)(2) of the Virginia Retail Sales and Use Tax Regulations states:
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- In order to determine whether a particular transaction which involves both the rendering of a service and the provision of tangible personal property constitutes an exempt service or a taxable retail sale, the "true object" of the transaction must be examined. If the object of the transaction is to secure a service and the tangible personal property which is transferred to the customer is not critical to the transaction, then the transaction may constitute an exempt service. However, if the object of the transaction is to secure the property which it produces, then the entire charge, including services provided, will be taxable.
- In order to determine whether a particular transaction which involves both the rendering of a service and the provision of tangible personal property constitutes an exempt service or a taxable retail sale, the "true object" of the transaction must be examined. If the object of the transaction is to secure a service and the tangible personal property which is transferred to the customer is not critical to the transaction, then the transaction may constitute an exempt service. However, if the object of the transaction is to secure the property which it produces, then the entire charge, including services provided, will be taxable.
If you have any further questions, please contact us.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner