Tax Type
Retail Sales and Use Tax
Description
Financial institutions; Checks
Topic
Taxability of Persons and Transactions
Date Issued
08-04-1995
August 4, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear********************
This will reply to your letter of January 19, 1995, on behalf of *********** (the "Taxpayer") in which you request a ruling on the application of the tax to sales of checks and related items by credit unions.
FACTS
The Taxpayer is a commercial check printer that prints checks and related items for sale to members of credit unions. Credit unions may place orders for their members or members may place orders directly with the Taxpayer. The orders are printed and shipped by the Taxpayer to credit union members and the credit union members' accounts are debited for the cost of the checks.
The Taxpayer believes that it is a retailer making sales of checks directly to Virginia members of credit unions and that it is the proper party to collect and remit sales tax on these sales. Accordingly the Taxpayer feels Virginia credit unions are not obligated to collect and remit Virginia sales tax on these same sales.
RULING
The department recently addressed this issue in P.D. 95-159 (6/16/95, copy enclosed) in which we upheld our longstanding policy with respect to sales of checks and similar items by financial institutions. Code of Virginia § 58.1-612 and Virginia Regulation (VR) 630-10-29.1 (copies enclosed), set forth the criteria used to determine who is a dealer. Every person who sells at retail, or offers for sale at retail, tangible personal property in Virginia is considered a dealer.
Based on the information presented, Virginia credit unions meet the necessary criteria requiring them to register and collect sales tax on sales of checks, checkbooks, and other tangible personal property. This is also consistent with VR 630-10-12 (copy enclosed), which states "When any bank engages in selling, leasing or renting tangible personal property to consumers, it must register as a dealer and collect and pay the tax to the Department of Taxation."
Notwithstanding the above, the department has recognized the administrative burden placed on parties involved in collecting and reporting sales tax on sales of checks and related items and has agreed to allow check printers to begin providing this service to financial institutions. Check printers wishing to collect and remit sales tax on behalf of financial institutions are required to sign a sales and use tax collection agreement with the department to begin providing this service as explained in P.D. 95-159.
You may contact*********for further information on a sales and use tax collection agreement or if you have any questions concerning this letter.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9229S
Rulings of the Tax Commissioner