Tax Type
Retail Sales and Use Tax
Description
Rural Electric Utilities
Topic
Exemptions
Date Issued
10-31-1991
October 31, 1991
Re: Request for Ruling: Sales and Use Tax
Dear******************
This will reply to Your letter of December 28, 1990, regarding the application of the sales and use tax to rural electric utilities
Va. Code §58.1-608 (A) (3)(c) exempts from the tax "tangible personal property sold or leased to ... a public service corporation subject to a state franchise or license tax upon gross receipts ... or ... a telecommunications company as defined in §58.1-400 ... for use or consumption by such corporation, (or) company ... directly in the rendition of its public service." Virginia Regulation 630-10-87, copy enclosed, explains the application of the exemption.
As demonstrated in the statute and regulation, the exemption does not apply to all tangible personal property used by a utility. The exemption is limited only to property that is indispensable to the rendition of a public utility service and is used or consumed immediately in the rendition of the service. Furthermore, in order to make an exempt sale or lease to a utility, it will first be necessary for your corporation to obtain from the utility a completed certificate of exemption, Form ST-20.
To the extent that a power company does not qualify as a public service corporation (a cogenerator, for instance), it may qualify for the industrial manufacturing exemption under Va. Code §58.1-608 (A) (3) (b). The industrial manufacturing exemption is interpreted in Virginia Regulation 630-10-63, copy enclosed. Also enclosed is a recent ruling dealing with the application of the tax to cogenerators (Public
Document 89-274). Again, it will first be necessary to obtain a completed certificate of exemption, Form ST-11, before making an exempt sale to a manufacturer.
Finally, motor vehicles generally are not subject to the retail sales and use tax. Instead, they are subject to the motor vehicle sales and use tax administered by the Department of Motor Vehicles. There is no general exemption in the motor vehicle sales and use tax law that would cover vehicles owned or operated by a utility.
I trust that this information will answer your questions, but please do not hesitate to contact the department if further questions arise.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner