Tax Type
Retail Sales and Use Tax
Description
Watercraft, barge
Topic
Taxability of Persons and Transactions
Date Issued
04-07-1995
April 7, 1995
Re: Request for Ruling: Sales and Use Tax
Dear*********
This will reply to your letter of April 25, 1994 in which you seek reconsideration of a previous determination of the department with respect to the application of retail sales and use tax to watercraft.
Code of Virginia §58.1-1401 defines "watercraft" for purposes of the watercraft sales and use tax as follows:
"Watercraft" means any contrivance (i) used or which is capable of being used as means of transportation on water, (ii) which is fifteen feet or more in overall length measured along the centerline and (iii) which is Powered by a motor in excess of twenty-five horsepower....The term shall not include... a watercraft which has a valid marine titling document issued by the United States Coast Guard. (Emphasis added).
On the surface, it appears that the barge in question fails to meet the definition of a "watercraft" as it is not in fact powered by a motor in excess of 25 horsepower. If this is true, the question of documentation with the U.S. Coast Guard becomes irrelevant.
It is also noted in your letter that the Taxpayer feels the barge in question may qualify for the sales and use tax exemption under the "interstate and foreign commerce" exemption. Code of Virginia §58.1-609.3(4) provides a sales and use tax exemption for "ships or vessels, or repairs and alterations thereof, used or to be used exclusively and principally in interstate or foreign commerce". (Emphasis added). The department has interpreted this stature in VR 630-10-98 as follows:
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- The tax does not apply to ships or vessels used or to be used exclusively or principally in interstate or foreign commerce or to repairs and alterations of them. The tax does not apply to fuel and supplies for use or consumption aboard ships or vessels plying the high seas, either in intercoastal trade between ports in this state and ports in other states of the United States or its territories or possessions; or in foreign commerce between ports in this state and ports in foreign countries when delivered directly to such ships or vessels. The tax does not apply to tangible personal property used directly in the building, conversion or repair of such ships or vessels. The foregoing exemptions are restricted to the ships and vessels described and do not extend to other ships. vessels. boats or other watercraft.
- The tax does not apply to ships or vessels used or to be used exclusively or principally in interstate or foreign commerce or to repairs and alterations of them. The tax does not apply to fuel and supplies for use or consumption aboard ships or vessels plying the high seas, either in intercoastal trade between ports in this state and ports in other states of the United States or its territories or possessions; or in foreign commerce between ports in this state and ports in foreign countries when delivered directly to such ships or vessels. The tax does not apply to tangible personal property used directly in the building, conversion or repair of such ships or vessels. The foregoing exemptions are restricted to the ships and vessels described and do not extend to other ships. vessels. boats or other watercraft.
Based on all of the foregoing, I find no basis, at this time, for refunding to the taxpayer the 41/2% retail sales paid on the barge.
If you should have any further questions, please feel free to contact the department.
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- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
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Rulings of the Tax Commissioner