Tax Type
Retail Sales and Use Tax
Description
Retail Sales; Technical Manuals and Videotapes
Topic
Taxability of Persons and Transactions
Date Issued
03-11-1991
March 11, 1991
Re: Request for Ruling: Sales and Use Tax
Dear***************
This will reply to your letter of April 27, 1990 requesting a ruling on the application of the sales and use tax to the purchase and sale of technical manuals and videotapes by the**************("the Taxpayer").
Facts
The Taxpayer is a Virginia based professional organization which provides its members assistance in areas such as management, marketing, labor relations and technical research development. All of the Taxpayer's present members are located outside of Virginia.
The Taxpayer hires out-of-state consultants to develop technical manuals or produce videotapes on subjects of interest to its members. The final product produced by a consultant is delivered to the Taxpayer who will then have the items reproduced, often by a Virginia based firm. Some of the reproduced items are then distributed to association members free of charge while others are sold to members and nonmembers.
The Taxpayer requests a ruling whether various costs, such as typesetting and printing, incurred in duplicating and preparing the articles for resale are subject to the sales and use tax.
Ruling
Under Va. Code §§ 58.1-603 and 58.1-604, the Taxpayer would be required to remit the sales and use tax on the cost price of the master copies of the manuals and videotapes purchased exclusive of the tax from its out-of-state suppliers and delivered within Virginia to the Taxpayer. In addition, the Taxpayer would be subject to the tax on the copies of manuals and videotapes which
it receives and then distributes free to any members within Virginia. The tax would be computed upon the total invoice charge to the Taxpayer for the manuals and tapes, including any charges for services rendered in connection with the sale.
The Taxpayer would also be subject to the tax on the videotapes intended for distribution to its out-of-state members free of charge. However, Va. Code § 58.1-608(6)(d) provides an exemption for certain printed materials stored in Virginia and mailed outside the state. Therefore, the manuals stored in Virginia for twelve months or less and distributed for use without Virginia would not be subject to the tax. The taxpayer must furnish its printer with a certificate of exemption (Form ST-10A), copy enclosed, to substantiate the exempt sale to the Taxpayer.
The copies of the manuals and videotapes which will actually be resold may be purchased exempt of the tax by the Taxpayer under a resale certificate of exemption, Form ST-10, copy enclosed. The total invoice charge would be exempt, including the associated charges for typesetting, copying and printing when charged by the vendor reproducing and selling the items to the Taxpayer for resale. However, the Taxpayer must collect the tax on the sales price of the manuals and tapes sold to purchasers within Virginia ( See VR 630-10-95, copy enclosed). The Taxpayer would not collect the tax on the sales to out-of-state purchasers if delivery of the item is made to the purchaser outside of Virginia in the seller's vehicle, by an independent trucker or contract carrier hired by the seller, or by the U. S. Post office or a common carrier ( See VR 630-10-51, copy enclosed).
When the Taxpayer makes bulk purchases of the reproduced items and is unable to identify at the time of purchase which of the items will be resold and which of the items will be distributed in a taxable manner, the Taxpayer may purchase all of such items exempt of the tax for resale, under the above referenced Form ST-10. However, when any of the untaxed items are later used in a taxable manner as described above, the Taxpayer will be required to remit the use tax directly to the department, based on the cost price of such items at the time of purchase.
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