Tax Type
Forest Products Tax
Description
Taxability of persons and transactions; Manufacturing; Wood chips
Topic
Basis of Tax
Date Issued
03-23-1995
March 23, 1995
Re: Ruling Request: Forest Products Tax
Dear**************
This will respond to your letter of January 12, 1995 seeking a ruling on whether ******* (the "Taxpayer") is liable for a severance tax on waste wood chips delivered by tree chipping operations for the Taxpayer's use as fuel in the production of electricity for resale.
The only severance tax administered by the Department of Taxation is the forest products tax set out under Code of Virginia §§ 58.1-1600 through 58.1-1622. The forest products tax is levied only on those types of manufacturers or shippers of forest products defined in the statute. In this case, a tree chipping operator is producing wood chips from the laps of trees for sale or commercial use as a fuel product. Therefore, the tree chipping operator is deemed a manufacturer of fuel wood under the statute and is solely responsible for paying the forest products tax on such manufactured chips.
The Taxpayer is not liable for the forest products tax on wood chips purchased by, or donated to, the Taxpayer in these instances. Nor is the Taxpayer subject to a retail sales and use tax on wood chip purchases, since the wood chips are used directly in the manufacturing process.
If you should have any questions regarding this letter, please contact******************.
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- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
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OTP/9170R
Rulings of the Tax Commissioner