Tax Type
Retail Sales and Use Tax
Description
Major Sales Tax Legislation
Topic
Basis of Tax
Date Issued
06-23-1995
Major Sales Tax Legislation
Passed By The 1995 General Assembly
Several bills were passed by the 1995 General Assembly which changed the application of the retail sales and use tax to various industries. This bulletin summarizes some of the major changes, all of which become effective July 1, 1995. Other changes are summarized in the Department's Legislative Summary. This bulletin supersedes Tax Bulletins 93-7 and 94-7.
Printing/Advertising Industries
Senate Bill 648 (Chapter 171, 1995 Acts of Assembly) extends the exemption provided in Code of Virginia §58.1-609.6(4) for printed materials (other than administrative supplies) stored for 12 months or less in Virginia for distribution in other states to Virginia advertising agencies. In 1994, the exemption was made available only to out-of-state advertising agencies. Also exempted by the legislation are newspaper supplements, when purchased by advertising agencies for placement in instate or out-of-state publications.
In applying the printing exemption, advertising agencies and printers should follow the guidelines set out in Virginia Regulation (VR) 630-10-86.
Virginia Certificate of Exemption, Form ST-10A, has been revised to reflect the printing and advertising supplement exemptions now available to Virginia agencies.
Retailers - Gift Transactions
House Bill 2286 (Chapter 96, 1995 Acts of Assembly) exempts from the retail sales and use tax third party gift transactions in which a nonresident, by mail or telephone purchase order, directs a Virginia business to deliver the personal property as a gift to another nonresident.
The exemption is limited to gifts purchased by out-of-state residents by telephone or mail-order when delivered to out-of-state recipients. Gifts delivered to Virginia residents at the direction of out-of-state purchasers and gifts purchased by Virginia residents for delivery to out-of-state recipients remain taxable.
Audiovisual Tapes/Film Production
Senate Bill 721 and House Bill 1512 (Chapters 101 and 719, respectively, 1995 Acts of Assembly) created a comprehensive exemption for entities engaged in the production, use, purchase, sale or lease of audiovisual tapes for licensure, distribution, broadcast, commercial exhibition, or reproduction or use in producing another exempt audiovisual work. Examples of such entities include, but are not limited to, program producers, (i.e., radio, television and cable television companies), film and audiovisual tape production companies, advertisers, and others. In addition, to the extent their works, services, or products are used in exempt audiovisual works, other entities may qualify for the exemption. These include, but are not limited to, on services providers (i.e., script writers), contractors (i.e., those who construct sets used in the production of exempt works); photographers; animal trainers, lighting service companies, etc.
Tax Status of Various Types of Audiovisual Works
Examples of exempt works include: made-for-TV movies and programs, feature films, documentaries for commercial exhibition, broadcast, distribution, etc., commercials for public viewing, radio programs, other works made for reproduction/use in another production .
Examples of taxable audiovisual works include: in-house training films; films of weddings, corporate meetings, or other special events; and films for purposes other than distribution, broadcast, commercial exhibition, etc.
Production Services and Incidental Tangible Personal Property
Production services or fabrication in connection with the production of any portion of an exempt audiovisual work, and the transfer or use of tangible personal property incidental to such services or fabrication, are also exempt from the tax. Exempt production services include, but are not limited to, photography, sound, music, special effects, animation, adaptation, computer graphics; dubbing, mixing, editing, or cutting services; wardrobe, performing, composing, directing; designing, engineering, construction, alteration, repair, and maintenance of real or personal property such as stages, props, and models; and film processing.
Exempt tangible personal property, includes, but is not limited to: scripts, musical scores, storyboards, artwork, film, tapes; writing instruments, design and artistic supplies; wardrobes/costumes (and appliances used to maintain such), hairpieces, shoes, makeup; sets and the materials used to construction such, props (i.e., plants, trees); and special effects (i.e., fire, explosives, fire extinguisher, fog).
Taxable tangible personal property includes, but is not limited to: office equipment and supplies; cages used by animal handlers to keep animals in while not being filmed; chairs, etc., not used in the actual production services (for convenience purposes); locations - tents, trash receptacles, toilets; polaroids for head shots.
Equipment, Parts, and Accessories
An exemption also extends to the equipment, parts, and accessories used or to be used in the production of exempt audiovisual works. Exempt equipment includes, but is not limited to: cameras and related equipment; computers for graphics, animation, images; lighting equipment, bulbs, lamps; air conditioning heating for use on set; cranes and booms; dubbing, editing, and sound recording equipment.
Taxable equipment includes, but is not limited to: air conditioning/heating to maintain the integrity of equipment; computers and other equipment used for administrative purposes.
The tax on equipment used in both taxable and exempt activities will be prorated.
A new Certificate of Exemption, Form ST-20A, has been developed for use with this exemption.
For additional information: Contact the Office of Taxpayer Services, Virginia Department of Taxation, P.O. Box 1115, Richmond, Virginia 23208-1115, (804) 367-8037.
Rulings of the Tax Commissioner