Tax Type
Retail Sales and Use Tax
Description
Promotional items; Temporary storage in Virginia
Topic
Property Subject to Tax
Date Issued
04-11-1994
April 11, 1994
Re: §58.1-1821 Application: Sales and Use Tax
Dear**********
This will reply to your letter of June 3, 1993, in which you questioned the inclusion of certain items in a recent sales and use tax audit of your association. Due to the issues raised, I feel it more appropriate to treat your letter as an appeal to the Tax Commissioner under Va. Code §58.1-1821.
FACTS
Your association purchased various items (ribbons, identification clips, tee shirts, etc.) for use in connection with a convention that was held in another state. You contend that the exemption provided in Va. Code §58.1-609.6 (4) for printed materials for use outside Virginia should apply to the items used in the convention. Additionally, you request the waiver of penalty and interest with respect to items upon which tax was paid to another state.
DETERMINATION
Va. Code §58.1-609.6 (4) provides an exemption from the sales and use tax for:
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- Catalogs, letters, brochures, reports, and similar printed materials, except administrative supplies ... when stored for twelve months or less in the Commonwealth and distributed for use without the Commonwealth. (Emphasis added)
Under long-standing Virginia case law, exemptions from the tax are strictly construed, with any doubts resolved against the person claiming the exemption. By its clear wording, this particular
exemption is limited to printed materials that are "similar" to catalogs, letters, brochures, and reports. Also, administrative supplies are clearly taxable.
In this case, items such as ribbons, identification card clips, tee shirts, fanny packs, and plaques, although their production in some cases may involve an element of printing (such as screen printing for tee shirts), clearly are not "similar" to catalogs, letters, brochures, or reports. As such, the exemption does not apply. In addition, as these items were for your association's own use in conducting an exemption, they are analogous to administrative supplies. The term "administrative supplies" is defined in Virginia Regulation 630-10-86 as including:
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- letterhead, envelopes and other stationery, invoices, billing forms, payroll forms, price lists, time cards, computer cards, certificates, business cards, diplomas and awards. The term also includes supplies for internal use by the purchaser, such as menus, calendars, datebooks, desk reminders, appointment books, employee newsletters and other house organs. Emphasis added
To the extent that first use of an item occurs in Virginia, other states' sales and use taxes are generally not applicable to the transaction. In this case, your association erroneously paid tax to other states; the department did not assess penalty on those transactions, but did assess interest. As the Virginia tax was properly assessed on the transactions, I do not see any basis for waiver of the interest. I would also note that your association likely can apply for refunds to the states to which tax was erroneously paid.
Based upon the foregoing, I do not find basis for granting relief from the assessment. However, I will agree to waive the interest that has accrued since the date of your appeal if a payment of $********* (the balance of tax and interest due as of the date of your appeal) is received within 30 days. You may forward the payment to ************** c/o Office of Tax Policy, Department of Taxation, P. O. Box 1880, Richmond, Virginia 23282-1880.
Your letter also mentioned the possibility of further appeal. The next step of the appeals process would be an application to the circuit court under Va. Code §58.1-1825. There is no specific application form to apply to the circuit court; however, I have enclosed a copy of the statute.
Sincerely,
Danny M. Payne
Acting Tax Commissioner
Rulings of the Tax Commissioner