Tax Type
Retail Sales and Use Tax
Description
Logging business; Harvesting of forest products
Topic
Taxability of Persons and Transactions
Date Issued
07-28-1989
July 28, 1989
Re: Request for Ruling: Sales and Use Tax
Dear***************
This will reply to your letter dated May 25, 1989, in which you requested a ruling on the application of the sales and use tax to your business.
FACTS
**************************("The Taxpayer") operates a contract logging business within the Commonwealth. The Taxpayer contends that it makes purchases of tangible personal property in accord with Virginia Code §58.1-608(2)(f), formerly §58.1-608(51), which provides an exemption from the tax for "[m]achinery...tools and repair parts...used directly in the harvesting of forest products for sale..." The Taxpayer specifically asks what documentation is necessary to substantiate the above exemption in order to purchase such tangible personal property exempt from the tax and also asks whether it must file an annual return.
RULING
Virginia Regulation 630-10-20, copy enclosed, states that "[a]ll sales, leases and rentals of tangible personal property are subject to the tax until the contrary is established. The burden of proving that the tax does not apply rests with the dealer unless he takes, in good faith from the purchaser or lessee, a certificate of exemption indicating that the property is exempt under the law." (Emphasis added).
Thus, the Taxpayer, must present to the dealer at the time of purchase a properly executed certificate of exemption, Form ST- 17, copy enclosed, which the dealer should keep on file. The Taxpayer must use such tax exemption in good faith in that the "certificate cannot be used to make a tax-free purchase of any item of tangible personal property not covered by the exact wording of the certificate." Virginia Regulation 630-10-20. Virginia Regulation 630-10-45.1, copy enclosed, describes the types of items used in the harvesting of forest products that qualify for the exemption.
Last, the Taxpayer asks whether it must file an annual sales or use tax return. The Taxpayer need not file a sales tax return since it does not make sales at retail. However, the Taxpayer would be required to file a use tax return, Form ST-9, whenever it makes a taxable purchase of an item from a dealer who does not charge the tax on such item, or whenever the Taxpayer makes a taxable use of any item initially purchased exempt from the tax.
Thus, the Taxpayer may be required to file a use tax return but only in those instances set out above. Use tax returns are not required to be filed in months in which no use tax is due. A use tax registration packet is enclosed if the Taxpayer is not registered for payment of the tax.
If we can be of further assistance, please contact us.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner