Tax Type
Retail Sales and Use Tax
Description
Agriculture; Tree farming
Topic
Taxability of Persons and Transactions
Date Issued
06-05-1996
June 5, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear******************
This is in reply to your letter of May 9, 1996, in which you request a ruling on the application of the retail sales and use tax to sales and rentals of tangible personal property which supplement funding of the ******** (the "Districts"), in the Commonwealth.
FACTS
The ****** (the"Agency") oversees the activities of the Districts which are political subdivisions of the Commonwealth. The Districts are funded by the General Assembly via grants provided by the Agency. Some of the Districts obtain additional funding from sales and rentals of tangible personal property used in agricultural and conservation activities.
The Agency desires, on behalf of the Districts, exemption from the collection of tax regarding retail sales of 1) tree seedlings used in agricultural production, erosion control, and beautification; 2) netting for soil erosion control; and 3) daily rentals of conservation equipment such as no-till drills, seeders, and spreaders.
RULING
Virginia Regulation (VR) 630-1045, copy enclosed, addresses the application of the retail sales and use tax to purchases and sales by the federal government and state and local governments. State government, its agencies, political subdivisions, and local government are not entitled to an exemption from the collection of the tax on their sales of tangible personal property unless such property is otherwise exempt. Section 2.2 of the regulation provides a specific listing of instances when sales by state and local governments would qualify for exemption.
In addition, Code of Virginia § 58.1-609.2(1) and VR 630-104, copies enclosed, discuss the exemPtion afforded to farmers engaged in agricultural production for market. Section A of the regulation exempts seed from the tax and Section C designates tree farming as agricultural production. As such, sales of tree seedlings to farmers for use in agricultural production for market will qualify for exemption from the sales tax.
Netting used to control soil erosion is not listed as an exempt item used in agricultural production for market according to the regulation. Netting, however, may be sold exempt of the tax if purchased by a nonprofit wildlife organization as described under Code of Virginia § 58.1-609.8(24), or a nonprofit ecological/conservation organization as described under Code of Virginia§ 58.1-609.9(9). Copies of the statutes are enclosed.
The cited agriculture exemption also applies to farm machinery and equipment used in agricultural production for market. No-till drills, seeders, spreaders, and like equipment, when used for such purpose, may qualify for exemption from the sales tax when purchased by a farmer.
While the Agency in general must collect the tax on sales of tangible personal property, the items discussed in this ruling may be sold exempt of the tax to farmers or the qualifying nonprofit organizations, upon receipt of a completed and valid exemption certificate. Farmers must provide the enclosed Form ST-18. I am enclosing excerpts from the Virginia Sales and Use Tax Expenditure Study which designate the qualifying nonprofit organizations. For your information, I am also enclosing excerpts from the Study that provide a more detailed discussion of the sales tax treatment of governments and the agricultural exemption.
If you choose to pursue a sales and use tax exemption from the collection of tax for all sales, I am enclosing a questionnaire for legislative consideration of a sales and use tax exemption request and Tax Bulletin 94-13, which explains the procedure and information required. If you are interested in pursuing legislation during the 1997 General Assembly Session, the questionnaire should be completed and forwarded to a legislator who will sponsor the exemption bill. The legislator must sign the questionnaire and submit it to the department by November 1, 1996.
I hope this has responded to your inquiry. Should you need additional assistance, please do not hesitate to contact **** in the Office of Tax Policy at ******.
Danny M. Payne
Tax Commissioner
OTP/11235J
Re: Request for Ruling: Retail Sales and Use Tax
Dear******************
This is in reply to your letter of May 9, 1996, in which you request a ruling on the application of the retail sales and use tax to sales and rentals of tangible personal property which supplement funding of the ******** (the "Districts"), in the Commonwealth.
FACTS
The ****** (the"Agency") oversees the activities of the Districts which are political subdivisions of the Commonwealth. The Districts are funded by the General Assembly via grants provided by the Agency. Some of the Districts obtain additional funding from sales and rentals of tangible personal property used in agricultural and conservation activities.
The Agency desires, on behalf of the Districts, exemption from the collection of tax regarding retail sales of 1) tree seedlings used in agricultural production, erosion control, and beautification; 2) netting for soil erosion control; and 3) daily rentals of conservation equipment such as no-till drills, seeders, and spreaders.
RULING
Virginia Regulation (VR) 630-1045, copy enclosed, addresses the application of the retail sales and use tax to purchases and sales by the federal government and state and local governments. State government, its agencies, political subdivisions, and local government are not entitled to an exemption from the collection of the tax on their sales of tangible personal property unless such property is otherwise exempt. Section 2.2 of the regulation provides a specific listing of instances when sales by state and local governments would qualify for exemption.
In addition, Code of Virginia § 58.1-609.2(1) and VR 630-104, copies enclosed, discuss the exemPtion afforded to farmers engaged in agricultural production for market. Section A of the regulation exempts seed from the tax and Section C designates tree farming as agricultural production. As such, sales of tree seedlings to farmers for use in agricultural production for market will qualify for exemption from the sales tax.
Netting used to control soil erosion is not listed as an exempt item used in agricultural production for market according to the regulation. Netting, however, may be sold exempt of the tax if purchased by a nonprofit wildlife organization as described under Code of Virginia § 58.1-609.8(24), or a nonprofit ecological/conservation organization as described under Code of Virginia§ 58.1-609.9(9). Copies of the statutes are enclosed.
The cited agriculture exemption also applies to farm machinery and equipment used in agricultural production for market. No-till drills, seeders, spreaders, and like equipment, when used for such purpose, may qualify for exemption from the sales tax when purchased by a farmer.
While the Agency in general must collect the tax on sales of tangible personal property, the items discussed in this ruling may be sold exempt of the tax to farmers or the qualifying nonprofit organizations, upon receipt of a completed and valid exemption certificate. Farmers must provide the enclosed Form ST-18. I am enclosing excerpts from the Virginia Sales and Use Tax Expenditure Study which designate the qualifying nonprofit organizations. For your information, I am also enclosing excerpts from the Study that provide a more detailed discussion of the sales tax treatment of governments and the agricultural exemption.
If you choose to pursue a sales and use tax exemption from the collection of tax for all sales, I am enclosing a questionnaire for legislative consideration of a sales and use tax exemption request and Tax Bulletin 94-13, which explains the procedure and information required. If you are interested in pursuing legislation during the 1997 General Assembly Session, the questionnaire should be completed and forwarded to a legislator who will sponsor the exemption bill. The legislator must sign the questionnaire and submit it to the department by November 1, 1996.
I hope this has responded to your inquiry. Should you need additional assistance, please do not hesitate to contact **** in the Office of Tax Policy at ******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11235J
Rulings of the Tax Commissioner