Tax Type
Retail Sales and Use Tax
Description
TRANSPORTATION CHARGES - LEASE OR RENTAL OF
TANGIBLE PERSONAL PROPERTY
TANGIBLE PERSONAL PROPERTY
Topic
Rate of Tax
Reports
Date Issued
09-27-1995
RETAIL SALES AND USE TAX:
TRANSPORTATION CHARGES - LEASE OR RENTAL OF
TANGIBLE PERSONAL PROPERTY
This bulletin is intended as notification of a change in tax policy effective January 1, 1996 regarding the application of the retail sales and use tax to separately stated transportation charges made in connection with the lease or rental of tangible personal property.
Effective January 1, 1996, transportation charges for picking up tangible personal property which is leased or rented to customers are exempt from the tax provided such transportation charges are separately stated on invoices to customers.
Current Policy
As set out in Virginia Regulation 630-10-107, separately stated transportation and delivery charges "for delivery from the seller to the purchaser" are exempt from the tax. Currently, transportation charges made to pick up leased or rented property are taxable, even if these pick up charges are separately stated.
Revised Policy
Effective January 1, 1996, separately stated transportation charges made for picking up leased or rented property are exempt from the tax. Separately stated delivery charges remain exempt from the tax.
Example: Lessor L rents tangible personal property to Customer C. L delivers the property to C and, at the end of the lease period, picks up the property from C. Charges for the delivery of the property from L to C and the charges for picking up the property are not taxable provided that the transportation charges are separately stated on L's invoice to C.
If the transportation charges are not separately stated on the invoice, they are taxable. However, delivery and pick up charges may be listed as a single transportation charge on invoices to customers and still satisfy the "separately stated" requirement.
This transportation exemption applies only to the delivery and pick up of property. For example, transportation charges for picking up rental payments are taxable. If these taxable fees are combined with the charges for delivering or picking up rental property, the entire charge is taxable.
This bulletin addresses only transportation charges made in connection with picking up leased or rented property and does not attempt to revise or restate the other provisions set out in the transportation regulation.
For additional information: Contact the Office of Customer Services; Virginia Department of Taxation; P. O. Box 1115; Richmond, Virginia 23208-1115 or call (804)367-8037
Rulings of the Tax Commissioner