Tax Type
Retail Sales and Use Tax
Description
Sale of convenience stores; Occasional sale requirements
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
04-28-1994
April 28, 1994
Re: Request for Ruling: Retail Sales and Use Tax
Dear*************
This will reply to your letter of April 14, 1994 in which you seek a ruling on behalf of an unidentified client (the Taxpayer).
FACTS
The Taxpayer, a corporation which owns and operates numerous retail convenience stores, desires to sell all of its stores and thus terminate its retail business. You indicate that there could be as many as ten separate purchasers and that the transactions could be completed in twelve months. You further indicate that the sales of the convenience stores would constitute the sale of substantially all of the assets of the corporation.
You request a determination outlining the department's position as to whether this transaction qualifies as an exempt occasional sale.
DETERMINATION
Va. Code §58.1-609.10(2) provides an exemption from the sales and use tax for an occasional sale which is defined in §58.1-602 to mean:
-
- a sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration.
Obviously, the first requirement of the exemption is not met since the sale of assets in this case is of tangible personal property held or used by the Taxpayer in the course of a retail activity for which he is required to hold a certificate of registration.
What must next be determined is whether the sale of all of the convenience stores, under the circumstances you describe, constitutes the sale of substantially all of the assets or the liquidation of the Taxpayer's business as envisioned in the exemption.
The department has previously determined that the sale of all or substantially all the assets of a business to one purchaser in one transaction may constitute an exempt occasional sale. Conversely, the department has also previously determined that the sale of a business requiring several transactions over an extended period of time to many different purchasers did not qualify as an exempt occasional sale. Rather, it was determined in these cases that the sales were sufficient in number, scope and character requiring the holding of a certificate of registration.
While the disposal of the individual locations may ultimately result in the sale of substantially all of the Taxpayer's assets, the nature of the transactions, to possibly ten separate purchasers over a one-year period, is not deemed to qualify as an exempt occasional sale.
Accordingly, tangible personal property sold by the Taxpayer in connection with the sales of its convenience stores is subject to the tax. However, the sales tax will not apply to the sale of real property, motor vehicles registered with the Department of Motor Vehicles, and tangible personal property sold under the resale exemption.
Sincerely,
Danny M. Payne
Acting Tax Commissioner
OTP/7852I
Rulings of the Tax Commissioner