Tax Type
Retail Sales and Use Tax
Description
Certificates of Exemption; Manufacturer and fabricator
Topic
Exemptions
Date Issued
10-25-1989
October 25, 1989
Re: Request for Ruling: Sales and Use Tax
Dear---------------
This is in reply to your letter of September 28, 1989 requesting further clarification of a ruling issued by this department on September 21, 1989.
As stated in my letter of September 21, 1989, your client does enjoy the manufacturing exemption as set forth in Virginia Code §58.1-608(3)(b). Your client is also considered a fabricator and must collect the sales tax on all sales made, including separately stated labor charges.
Your client, on occasion, makes sales of tangible personal property to third parties for resale. Your client must collect the sales tax on all sales unless a valid certificate of exemption is obtained from the customer. §630-10-20 of the Virginia Retail Sales and Use Tax Regulations addresses certificates of exemption and states, in part, the following:
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- All 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. The certificate will remain in effect except upon notice from the Department of Taxation that it is no longer acceptable. However, a certificate that is incomplete, invalid, infirm or inconsistent on its face is never acceptable, either before or after notice.
Certificates of exemption in the various categories will be furnished to dealers on request. Each certificate explains its use, and it may be reproduced by the dealer for use on purchase orders, sales slips or other documents relating to the transaction.
Reasonable care and judgment must be exercised by all concerned to prevent the giving or receiving of false, fraudulent or bad faith exemption certificates. An exemption 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.
- All 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. The certificate will remain in effect except upon notice from the Department of Taxation that it is no longer acceptable. However, a certificate that is incomplete, invalid, infirm or inconsistent on its face is never acceptable, either before or after notice.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner