Tax Type
Retail Sales and Use Tax
Description
Auctions; Occasional sales exemption
Topic
Taxability of Persons and Transactions
Date Issued
05-30-1996
May 30, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear*********************
This is in reply to your letter of May 15, 1996, in which you seek information on the application of the retail sales and use tax to auctioneers.
FACTS
The Taxpayer is an auctioneer engaged in conducting auctions for individuals selling the contents of a home, business owners closing out undesirable inventory, and businesses liquidating their operations. The Taxpayer also is engaged in conducting sales for banks to liquidate collateral relating to loans in default. The Taxpayer conducts these and other types of sales in and outside Virginia.
The Taxpayer has two upcoming sales involving the final liquidation of businesses. The Taxpayer requests a ruling on whether the occasional sales exemption applies to its various types of auctions.
RULING
The department has long held that auctioneers are engaged in selling tangible personal property, and as such, must collect and pay the sales tax computed on the gross sales price of each taxable sale. This is based on Virginia Regulation (VR) 630--10-9, copy enclosed, which addresses the sales tax treatment of auctioneers, agents, and factors. The auctioneer is deemed the seller of tangible personal property regardless of the fact that title to the property being sold may rest with another person.
The regulation provides an exception in the form of the occasional sale exemption (VR 630-10-75, copy enclosed). When an auctioneer is engaged in the sale of substantially all the assets
of a liquidating or reorganizing business and such sale occurs within three days or less, the auctioneer is not liable for the collection of the tax.
In reference to the two upcoming sales of the Taxpayer, it is my understanding that the sales have a duration of one day each. The Taxpayer, regarding these sales and future sales falling within the occasional sale exception, will not be liable for collection of the tax. The Taxpayer, however, must collect and pay the sales tax for all other auctions, including sales of undesirable inventory for businesses, conducted in Virginia.
I have enclosed a sampling of departmental rulings regarding the sales tax collection requirements for auctioneers in Virginia. I hope this has responded to your inquiry and should you have additional questions, please do not hesitate to contact **** in the Office of Tax Policy at *******
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11239J
Rulings of the Tax Commissioner