Tax Type
Retail Sales and Use Tax
Description
Radio and TV broadcasting; Transmission equipment
Topic
Exemptions
Property Subject to Tax
Date Issued
04-12-1993
April 12, 1993
Re: §58.1-1821 Application: Sales and Use Tax
Dear***************
This will reply to your letter of March 1, 1991 in which you are seeking relief of tax and interest assessed as a result of a sales and use tax audit of your client, *********** (the Taxpayer).
FACTS
The Taxpayer is a commercial radio station whose activities include the transmission of pre-recorded programs, live broadcasts, and the transmission of programs received by satellites. The Taxpayer is taking issue with certain equipment held taxable in the audit as not being used directly in the dissemination of signals into the air. A list of items being contested is set forth below.
A. Studio-Transmitter-Link Equipment (STL)
B. Equipment (CD players, tape players and recorders, microphones, and related equipment)
C. Repair Parts for Studio Equipment
D. Amplifying Equipment
E. Microphones and Headsets
F. Wegener Card for USA Network
G. Ampex Reel Degausser
H. Yamaha Service Manual
I. DTMF Decoders
DETERMINATION
Virginia Regulations (VR) 630-10-88 addresses radio and television broadcasting and states, in part, the following:
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- The tax does not apply to broadcasting equipment (and parts and accessories to that equipment) and towers used or to be used directly in broadcasting by commercial radio and television or concerns which are under the regulation and supervision of the Federal Communications Commission. (Emphasis added).
- The tax does not apply to broadcasting equipment (and parts and accessories to that equipment) and towers used or to be used directly in broadcasting by commercial radio and television or concerns which are under the regulation and supervision of the Federal Communications Commission. (Emphasis added).
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- Broadcasting as used in this section means transmitting and not programming (program preparation). The exemption applies only to broadcasting equipment and accessories to such equipment used directly in disseminating a signal into the air. Equipment and accessories used to create the material to be disseminated are taxable. (Emphasis added).
- Broadcasting as used in this section means transmitting and not programming (program preparation). The exemption applies only to broadcasting equipment and accessories to such equipment used directly in disseminating a signal into the air. Equipment and accessories used to create the material to be disseminated are taxable. (Emphasis added).
A. Studio-Transmitter-Link Equipment (STL) - This equipment is used to relay the signal for direct broadcast from the studio to the transmitter site next to the studio. As set forth above, VR 630-10-88 provides an exemption for "broadcasting equipment and accessories to such equipment used directly in disseminating a signal into the air." added). Based on the information provided, I find the STL equipment to fall into the category of "accessories" to equipment used directly in disseminating a signal into the air and therefore exempt. The audit will be adjusted accordingly.
B. Studio Equipment - This equipment consists of compact disc players, audio tape players and recorders, microphones, and other like equipment used in the main control room, and also used in an auxiliary control room for production of material to be broadcast. To the extent such equipment is used directly in broadcasting(disseminating a signal over the airwaves), the equipment shall enjoy the exemption. However, it is also understood by this office that the same equipment y also be used in programming, i.e. preparing taped prerecorded programs to be broadcast at a later date. Therefore, a proration of taxable versus exempt use must be established. Once the proration of such equipment has been established, the audit will be adjusted accordingly.
C. Repair Parts for Studio Equipment - These parts would follow the same proration to the corresponding equipment as established above.
D. Amplifying Equipment - This equipment is used to amplify the studio signal to speakers throughout the Taxpayer's facility which allows the broadcast to be monitored by radio personnel. This equipment does not disseminate signals over the airwaves; therefore, is taxable.
E. Microphones and Headsets - These items are utilized in remote live broadcasts away from the studio, thus rendering them exempt from the tax. Such items will be removed from the audit.
F. Wegener Card for USA Network - This item consists of an electronic board used to receive satellite signals from the USA Network. Provided signals are simultaneously broadcast upon receiving them, this equipment would enjoy the exemption. If such signals are received, recorded and broadcast at later date, the equipment would be taxable as being used in program preparation. Therefore, this item should be prorated based on its use.
G. Ampex Reel Degausser - Used to demagnetize and clean tape heads of sound equipment. While this equipment is necessary in order to maintain the quality of the sound equipment, it is not directly used to disseminate signals over the airwaves, thus subject to the tax.
H. Yamaha Service Manual - Service manual for tape deck. This is clearly an indirect use in broadcasting and therefore taxable.
I. DTMF Decoders - These devices are used to receive signals from the USA Network satellite. Like the Wegener Cards, the tax should be prorated between exempt and taxable use.
Based on the above, the audit will be adjusted accordingly. A representative from the department will contact the Taxpayer in order to make the necessary revisions.
If you or your client should have any further questions, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/5004K
Rulings of the Tax Commissioner