Tax Type
Retail Sales and Use Tax
Description
Promotional gifts
Topic
Taxability of Persons and Transactions
Date Issued
09-19-1989
September 19, 1989
Re: §58.1-1821 Application: Sales and Use Tax
Dear****************
This will reply to your letter of July 31, 1989, in which you submit an application for correction of sales and use tax assessed to **********as the result of a recent audit.
FACTS
*********** ("Taxpayer") is engaged in the sale of real estate time-share memberships. In connection with its business, the taxpayer purchases gifts which are in turn provided to persons who visit its time share facilities.
A recent audit of the taxpayer produced an assessment for its failure to remit the sales and use tax on its purchase of these gifts. The taxpayer protests the assessment, contending that the gifts were not delivered or distributed in Virginia.
DETERMINATION
Va. Code §§58.1-603 and 58.1-604 levy the sales and use tax upon the sale, distribution, use, or storage of tangible personal property in Virginia, even though the property may be intended for ultimate distribution outside the state. See Commonwealth v. Miller-Morton, 220 Va. 852, 263 S.E.2d 413 (1980).
In addition, Virginia Regulation 630-10-85 specifies that:
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- Donors of tangible personal property are (the) users or consumers of such property. Their purchases are taxable, including purchases of gifts for advertising or promotional purposes.
Similarly, Virginia Regulation 630-10-44.1 provides:
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- If a resident or nonresident buys a gift in Virginia and requests the seller to ship or mail such gift to another person, the purchaser is deemed to receive title to the gift at the time of purchase and the transaction is therefore taxable in Virginia. The location of the recipient of the gift has no bearing upon the taxability of the transaction...
- If a resident or nonresident buys a gift in Virginia and requests the seller to ship or mail such gift to another person, the purchaser is deemed to receive title to the gift at the time of purchase and the transaction is therefore taxable in Virginia. The location of the recipient of the gift has no bearing upon the taxability of the transaction...
A representative of the department will contact the taxpayer shortly to determine any audit adjustments that may be necessary in accordance with this letter.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner