95-302 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Occasional sales, including mergers; Convenience store equipment

Topic

Taxability of Persons and Transactions

Date Issued

12-01-1995

December 1, 1995

Re: § 58.1-1821 Application: Sales and Use Tax

Dear****************:

This will respond to your letter of February 8, 1995 seeking correction of an audit assessment issued to************** (the"Taxpayer").

FACTS

The Taxpayer leases and operates a convenience store selling general merchandise and gasoline. An audit for the period January 1993 through November 1994 resulted in an assessment for untaxed purchases of equipment and supplies used in the store's operation.

The only contested issue is the Taxpayer's purchase of inside store equipment in a single transaction from a petroleum retailer (the "Retailer"). It is my understanding that the Retailer operates several convenience stores from which merchandise is sold at retail. In this case, the Taxpayer leases a store from the Retailer. The prior operator of the store had owned the inside store equipment until it ceased business and sold all of its equipment to the Retailer. Although the Retailer purchased the equipment with the intention of reselling it to the next operator of the store, a new operator could not be obtained immediately. At this point, it is my understanding that the Retailer, rather than an independent operator, operated the store and used the store equipment it had purchased from the prior store operator, until the Taxpayer became the new store operator. At such time, the Retailer sold the used store equipment to the Taxpayer.

The Taxpayer maintains that the sale of inside store equipment by the Retailer to the Taxpayer qualifies for the occasional sale exemption, since the Retailer does not routinely sell inside store equipment.

DETERMINATION

The department's policy as it relates to the issue in this case is well established and set forth in existing public documents. See P. D.'s 87-56 (2/27/87), 89-307 (11/7/89), and 95-172 (6/26/95), copies enclosed. Of these, P.D. 89-307 provides that:

- ...a registered dealer is not allowed an occasional sale exemption for the mere fact that the article sold differs in type or class from the products he normally sells. Rather, if the article sold is used in the course of a registerable activity, ...the exemption applies only if the sale of all or substantially all of the assets of a business occurs.

In the Taxpayer's case, the Retailer used the inside store equipment in a registerable activity. Also, the Retailer's sale of inside store equipment to the Taxpayer did not represent the sale of all or substantially all of the assets of the Retailer's convenience store business as the Retailer continued to operate other retail locations from which taxable sales were made. Therefore, in the absence of evidence to the contrary, the Taxpayer's purchase of inside store equipment does not qualify for the occasional sale exemption.

Since the assessment has not been paid, an updated bill will be issued shortly and should be paid within 30 days to avoid further interest charges.

If you have any additional questions, please contact********at***********.

Sincerely,

Danny M. Payne
Tax Commissioner

OTP/9357R

Rulings of the Tax Commissioner