Tax Type
Retail Sales and Use Tax
Description
Service station equipment; Sales, installation and repair
Topic
Exemptions
Property Subject to Tax
Date Issued
07-30-1991
July 30, 1991
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear**************
This will reply to your letter of December 27, 1990 in which you seek correction of a sales and use tax assessment on behalf of************** (the Taxpayer).
FACTS
The Taxpayer is engaged in the business of contracting and retailing with respect to sales, installation, service and repair of service station equipment. An audit for the period January, 1987 through December 1989 produced an assessment for the failure of the Taxpayer to collect and remit sales tax on construction materials sold at retail by the Taxpayer and delivered to a contractor in*************. The materials were delivered to the buyer in a truck owned by an affiliated corporation of Taxpayer's by the Taxpayer's arrangement. The Taxpayer contests the assessment of tax, contending that the materials delivered are exempt from the tax under Va. Code § 58.1-608(A)(10)(d).
DETERMINATION
Virginia Regulation (VR) 630-10-51 states that the tax does not apply to sales of tangible personal property in interstate commerce. However, a sale in interstate commerce occurs only when the title or possession of the property to the property passes to the purchaser outside of Virginia.
VR 630-10-51(A) provides the illustration that the tax will not apply when tangible personal property sold to an out-of-state purchaser is delivered to the purchaser outside of the Commonwealth in the seller's vehicle or by an independent trucker or contract carrier hired by the seller. In the present case, the materials sold to the *********** purchaser were delivered to********* in a truck owned by an affiliated company of the Taxpayer. As the transportation outside the state was arranged by the seller (rather than the purchaser), the situation is clearly analogous to the examples of exempt deliveries in interstate commerce set out in VR 630-10-51. Consequently, the delivery in question was not subject to the Virginia tax and a revised notice of assessment will be issued shortly.
It is the understanding of the department that the disputed tank in question was previously removed from the audit findings.
If you have any other questions regarding this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner