Tax Type
Retail Sales and Use Tax
Description
Publishing and broadcasting; Cable television system defined
Topic
Taxability of Persons and Transactions
Date Issued
07-31-1995
July 31, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear********************
This will reply to your recent request for information relating to the sales and use tax exemption under Code of Virginia §58.1-609.6(2) relating to broadcasting and cable television systems. Specifically, you seek clarification of what constitutes a cable television system.
RULING
- Code of Virginia §58.1-609.6(2) provides an exemption for:
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- broadcasting equipment and parts and accessories thereto and towers used or to be used by commercial radio and television companies, cable television systems, or concerns which are under the regulation and supervision of the Federal Communications Commission and amplification, transmission and distribution equipment used or to be used by cable television systems.
- broadcasting equipment and parts and accessories thereto and towers used or to be used by commercial radio and television companies, cable television systems, or concerns which are under the regulation and supervision of the Federal Communications Commission and amplification, transmission and distribution equipment used or to be used by cable television systems.
Furthermore, as provided in Code of Virginia §58.1-610 and explained in Ruling of the Tax Commissioner dated August 19, 1983 (copy enclosed), contractors may purchase amplification, transmission, distribution, equipment, etc., exempt of the tax when contracting with cable television systems.
However, as explained in P.D. 87-219 (10/2/87), copy enclosed, the usage of cable television equipment by other than a cable television system is not exempted. Thus, the exemption does not extend to contractors who design and install satellite systems/dishes for other than cable television systems, e.g., individuals who wish to circumvent or do not have access to the traditional cable television systems. While not specifically defined in Virginia Regulation (VR) 630-10-88 which interprets the above Code section, the term "cable television systems" envisioned by the exemption is limited to providers of cable television service to subscribers - those which receive and transmit signals.
Federal law, specifically 47 U.S.C. §522, supports the department's interpretation of the term. It defines "cable system" as:
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- a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community,....
- a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community,....
For your information, I am including a copy of the Exemption Analysis for the broadcasting exemption which appeared in the department's December 1991 Virginia Sales and Use Tax Expenditure Study. This explains the exemption in detail.
If you have any further questions about this matter, please contact************* in my Office of Tax Policy at**************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9636H
Rulings of the Tax Commissioner