Tax Type
Retail Sales and Use Tax
Description
Sale of one of two grocery stores
Topic
Taxability of Persons and Transactions
Date Issued
09-05-1989
September 5, 1989
Re: §58.1-1821 Application/Sales and Use Tax
Dear********************
This will reply to your letter of July 28, 1989, on behalf of *************(taxpayer), seeking correction of a sales and use tax assessment for the period of January 1986 through June 1988.
FACTS
The taxpayer was audited for the period of January 1986 through June 1988. The taxpayer owned and operated two grocery stores, one of which it sold in June 1988. The department's auditor treated the entire sale as a sale of capital assets and held it taxable in the audit. The taxpayer feels this transaction should be exempt as an occasional sale since the entire store was liquidated in a single transaction.
DETERMINATION
Virginia Code §58.1-608(10)(b) exempts an occasional sale from the retail sales and use tax. An "occasional sale" is defined in Virginia Code §58.1-602 as follows:
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- A sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration.
As can be seen from the above, in order to qualify as an occasional sale, the transaction must include "all or substantially all the assets of any business". §630-10-75(B) of the Virginia Retail Sales and Use Tax Regulations also defines the term "occasional sale" as follows:
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- A sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration. The words "not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration" mean that a registered dealer is not entitled to an occasional sale exemption solely by virtue of the fact that the article sold may be of a different class from the merchandise he/she regularly sells;...
- A sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration. The words "not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration" mean that a registered dealer is not entitled to an occasional sale exemption solely by virtue of the fact that the article sold may be of a different class from the merchandise he/she regularly sells;...
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- If Company B, which operates a hotel and holds a certificate of registration for collecting tax on room rentals, sells beds and mattresses used in the hotel, the occasional sale exemption is inapplicable since the property being sold is being used in the activity for which B is required to hold a certificate of registration.
- If Company B, which operates a hotel and holds a certificate of registration for collecting tax on room rentals, sells beds and mattresses used in the hotel, the occasional sale exemption is inapplicable since the property being sold is being used in the activity for which B is required to hold a certificate of registration.
I have enclosed for your information copies of previous determinations in similar cases. If you or your client should have further question, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner