Tax Type
Retail Sales and Use Tax
Description
Leases or Rentals; Medical Equipment
Topic
Taxability of Persons and Transactions
Date Issued
08-30-1991
August 30, 1991
Re: Request for Ruling: Retail Sales & Use Tax
Dear***************
This will respond to your letter of June 27, 1991 in which you seek a ruling on behalf of a client (the "Company ") regarding certain lease transactions.
FACTS
Company is in the business of leasing mobile medical equipment to corporations and joint ventures. Magnetic Resonance Imaging (MRI) equipment is purchased by the company and installed in a trailer specifically designed to house the equipment. The trailer is then pulled by a truck. The equipment is purchased under a resale certificate yet the vehicles are registered under the Interstate Registration Plan and all applicable sales tax and licensing fees are paid at the time of purchase. The Company leases the entire unit to a third party under three separate leases: one for the medical equipment, one for the truck, and one for the trailer.
You seek a ruling on the applicability of the motor vehicle and retail sales and use taxes to various transactions
RULING
I will address the taxability of equipment and motor vehicle leases separately below:
Equipment: Va. Code §58.1-604 imposes the retail sales tax on "every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth,...or who leases or rents such property within the Commonwealth." Thus, the leasing of the medical equipment by the Company, whether to related or unrelated companies, would be subject to the retail sales and use tax. I have enclosed a copy of a prior Ruling of the Commissioner dated July 31, 1986 which specifically addresses intercompany transactions.
Virginia Regulation (VR) 630-10-57, copy enclosed, explains the tax treatment of leases and requires that any person engaged in the business of leasing or renting tangible personal property to others must register as a dealer with the department and collect and pay the tax on gross proceeds. I have enclosed a copy of the dealer registration form and the instructions thereto. I have also enclosed a copy of VR 630-10-24 regarding the collection of the tax by dealers.
Motor vehicle leases: Sales, leases and rentals of motor vehicles are not subject to the retail sales and use tax provided they are subject to the Virginia motor vehicle sales and use tax administered by the Department of Motor Vehicles (DMV). Since the licensing/registration and the leasing of the truck and trailer would be subject to the motor vehicle sales and use tax, I am referring your letter to Commissioner of DMV, for a response with respect to these issues.
If you have any further questions about the retail sales tax, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner