Tax Type
Retail Sales and Use Tax
Description
Purchases by federal government agency
Topic
Exemptions
Date Issued
02-28-1991
February 28, 1991
Re: Request for Ruling: Sales and Use Tax
Dear******************
This will reply to your letter of February 14, 1991 requesting a ruling on the application of the retail sales and use tax to purchases made by the*************** ("the Agency").
FACTS
The Agency is an agency of the federal government. In connection with its construction of an office building, the Agency is making various purchases of tangible personal property using official government purchase orders and making payment with government checks made payable directly to the supplier.
The Agency requests a ruling whether the purchases are exempt of the tax and has submitted to the department copies of the applicable purchase orders, government checks, and supplier invoices as examples of the transactions in question.
RULING
Virginia Code § 58.1-608(1)(e) provides an exemption from the sales and use tax for "[t]angible personal property for use or consumption by...the United States." Interpreting this statute, Virginia Regulation (VR) 630-10-45 provides in part that "[t]he tax does not apply to sales to the United States if the purchases are pursuant to required official purchase orders to be paid out of public funds."
As the purchases in this case are pursuant to required official purchase orders to be paid out of public funds, I find that the transactions at issue here would not be subject to the sales and use tax. The Agency should furnish its suppliers with a certificate of exemption (Form ST-12), copy enclosed, to substantiate the exempt sale to the Agency.
However, please note that purchases made by the Agency's contractors, rather than the Agency itself, in connection with real property construction contracts will generally be subject to the tax. Only in instances where the credit of the Agency is bound directly and the contractor has been officially designated as the purchasing agent for the Agency will such purchases be deemed exempt from the tax. See VR 630-10-27(J) (copy enclosed).
I hope this responds to your questions, but let the department know if you need any additional information.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner