Tax Type
Retail Sales and Use Tax
Description
Soil bags and containers; Linen supply business
Topic
Exemptions
Property Subject to Tax
Date Issued
11-22-1994
November 22, 1994
Re: Va. Code §58.1-1821 Application: Sales and Use Tax
Dear**************
This will reply to your letter of December 20, 1993, and your follow-up letter of May 10, 1994, requesting a reconsideration of the § 58.1-1821 determination issued by the Tax Commissioner on November 18, 1991 (copy enclosed) to*************(the Taxpayer).
Based on the information provided in your letter, and letter of December 17, 1993 which accompanied your letter, containers which are used "in-house" at any given time comprise 63.2% of all containers owned by the Taxpayer. It should be noted that the containers which are used "in-house" must also be used directly in the processing operation to enjoy the exemption. As provided in the Tax Commissioner determination letter of November 18, 1991, "upon verification by the auditor of the percentages presented, the preponderance of use rule will be applied".
It is also noted in your letter of May 10, 1994, that the Taxpayer would also like a reconsideration of the "soil bags" held taxable in the audit. Code of Virginia §58.1-609.3(8) provides a sales and use tax exemption for, "tangible personal property... used directly in maintaining and preparing textile products for rental or leasing by an industrial processor engaged in the commercial leasing or renting of laundered textile products". Based on the information provided in the video furnished to this office, the soil bags are "used directly" in the Taxpayer's processing operation and are therefore exempt. The audit will be revised to remove the soil bags from the audit.
An auditor from our *****District Office will contact the Taxpayer. Upon verification of the percentages presented, the audit will be adjusted accordingly. If you should have any further questions, please feel free to contact the department.
Danny M. Payne
Tax Commissioner
OTP/7421K
Rulings of the Tax Commissioner