Tax Type
Retail Sales and Use Tax
Description
"First use" of property; Out-of-state companies
Topic
Property Subject to Tax
Date Issued
12-22-1995
December 22, 1995
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear********************
This will reply to your letter of December 7, 1995 in which you seek reconsideration of my letter of October 26, 1995, P.D. 95-272, to you regarding a sales tax assessment issued to**********(the "Taxpayer") for the period April 1992 through March 1995.
You now raise an issue not raised in your prior letter. Specifically, you suggest that the assessment should be revised to remove sales of scripts by the Taxpayer to an affiliated company's office located in another state for use in the production of a film out-of-state. You point out that in P.D. 95-274 (10/26/95) the department addressed a similar situation.
The transactions addressed in P.D. 95-274 involved purchases of scripts and musical scores by an out-of-state office of a Virginia company for use in the production of films in another state. Upon completion of the films, the scripts and scores were sent to Virginia for storage. Consistent with P.D. 95-274, I will agree to remove from the Taxpayer's assessment those sales of scripts which are shipped out-of-state by the Taxpayer for use in the production of films in another state. However, sales of scripts to customers who take delivery of such scripts in Virginia will remain taxable notwithstanding the fact that the scripts subsequently may be transported to another state for use in production as first use of the property is deemed to be made in Virginia. The term "use" is defined in Va. Code § 58.1-602 as "the exercise of any right or power over tangible personal property incident to the ownership thereof..." This position is supported by the opinion of the Virginia Supreme Court in Commonwealth v. Miller-Morton, 220 Va. 852, 263 S.E. 2d 413 (1980) which held that "if a taxable event occurs in Virginia subsequent delivery of property outside this State does not immunize the taxable event."
Accordingly, the assessment will be revised as set forth herein and a revised Notice of Assessment will be mailed to the Taxpayer as soon as practicable.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10676H
Rulings of the Tax Commissioner