Tax Type
Retail Sales and Use Tax
Description
Production of Videos
Topic
Exemptions
Property Subject to Tax
Date Issued
06-04-1993
June 4, 1993
Re: §58.1-1821 Application: Retail Sales & Use Tax
Dear**************
This will respond to your letter of April 22, 1993 in which you seek reconsideration of the department's March 4, 1993 determination to your business, the "Taxpayer."
For the reasons set forth in my March 4, 1993 letter and its attachments, I cannot agree that the production of videos should be classified as manufacturing and thus be entitled to the sales and use tax exemption set forth in Va. Code §58.1-608(A)(3)(b). Furthermore, I am enclosing a copy of P.D. 93-98 (4/12/93) and its attachments which further clarify the department's position with respect to this issue and which explain the department's position on equipment rentals to customers. With respect to the videography equipment, if the Taxpayer can provide documentation that such equipment is used solely for rentals (and not in connection with the usage of facilities) to customers, I may be willing to remove from the assessment the tax assessed on such equipment. However, for the reasons set forth in P.D. 93-98, the editing equipment will remain taxable.
With respect to your contention that the exemption for custom computer programs should extend to the production of videos, you should note that the current exemption for custom computer programs was not enacted until 1986. Prior to July 1, 1986, the department had consistently held that all computer programs in tangible form were deemed tangible personal property subject to the tax. Further, any charges made in connection with the sales of such programs, including labor or service charges, were also considered taxable. Under principles established by the courts, taxation is the rule and exemption is the exception. Thus, exemptions from the sales and use tax are strictly construed. Accordingly, I do not have the authority to extend the custom computer software exemption to video production.
Finally, notwithstanding your comments regarding the refund issue, the procedure outlined in my March 4, 1993 determination should be followed in seeking a refund for taxes incorrectly collected.
Accordingly, the assessment may be revised as provided herein if you provide the requested information on the videography equipment to the *******District Office within thirty days. If such information is not provided the allotted time, the assessment will be immediately due and payable and collection action will resume.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6955H
Rulings of the Tax Commissioner