Tax Type
Retail Sales and Use Tax
Description
Mining; Trucks used to haul coal
Topic
Taxability of Persons and Transactions
Date Issued
03-15-1996
March 15, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear***********
This will reply to your letter of January 25, 1996 in which you request a ruling as to the sales and use tax application to ********(the "Taxpayer"). Unfortunately, your letters of February 2, 1995 and October 26, 1995 were not received by this office. I apologize for our delay in replying.
FACTS
The Taxpayer is under contract with a Virginia mining company ("Company A") to haul raw coal from a mining site to a preparation plant. The mine site, mineral rights and preparation plant are all owned by a Virginia coal company ("Company B"). The Taxpayer is requesting a ruling as to the sales and use tax application to trucks and truck parts used in fulfilling its contractual obligations with Company A.
RULING
In Department of Taxation v. Wellmore Coal Corp., 228 Va.149, 320 S.E.2d 509 (1984), the Virginia Supreme Court found that when ore or mineral, for example coal, is subject to further processing, the exemption continues. Virginia Regulation (VR) 630-10-65.2. E, (copy enclosed), sets forth the department's policy with respect to contracted activities as they relate to the mining and mineral processing industry and states, in part, the following:
-
- The mining and mineral processing exemption extends to persons engaged in any phase of mining or mineral processing, provided such activities qualify for exemption as set forth in Subsection (A) and (B) of this regulation.
In the present case, the mine and the mineral processing plant is owned by the same company. Based on Wellmore Coal, when the mine and mineral processing plant is owned and operated by the same person, transportation from the mine site to the mineral processing site is an exempt activity. Based on VR 630-10-65.2.E, when an exempt activity is contracted out, the exemption extends to the person performing such activity. Therefore, I find that the raw coal hauling activity performed by the Taxpayer would qualify for the exemption.
If you should have any questions, please contact *****Office of Tax Policy, at ******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10951K
Rulings of the Tax Commissioner