Tax Type
Egg Excise Tax
Description
Frozen dinners
Topic
Basis of Tax
Date Issued
09-06-1996
September 6, 1996
RE: Request for Ruling: Egg Excise Tax
Dear*************
This will reply to your letter in which you request a ruling on the application of the Virginia Egg Excise Tax to certain categories of processed egg items sold by*********** ("the Taxpayer"). I apologize for the delay in responding to your request.
FACTS
The Taxpayer is a chain grocery store retailer who sells frozen meal platters and frozen sandwiches that contain eggs as part of the product. Examples of these items would be "TV dinners" which contain scrambled eggs, sausage, and hash browned potatoes or a sandwich which contains egg, bacon, and cheese. The Taxpayer purchases these products from manufacturers and stores them in its centralized warehouse. The products are sold to the grocery stores upon request. You request a ruling as to whether the Virginia Egg Excise Tax applies to these frozen products and the department's formula for determining the egg portion of these mixed products.
RULING
Code of Virginia § 3.1-796.11:4, copy enclosed, provides that a handler of eggs or egg products will collect the Virginia Egg Excise Tax from the person who purchases the eggs or egg products for use or consumption in Virginia. A handler, in part, is defined as any person who operates a grading station, a packer, huckster, distributor or other person who purchases, sells, or handles eggs that are used at the wholesale level for consumption in Virginia. Eggs are deemed to be used in Virginia if, at a Virginia location, they are incorporated into another product so as to lose their character as eggs. Eggs that are incorporated at a Virginia location into frozen dinners and sandwiches are also deemed to be used in Virginia even though the eggs may be identifiable food items. In these instances, the handler must collect the egg tax from the purchaser when the eggs or egg products are used in Virginia.
In this instance, the manufacturer who sells the Taxpayer frozen dinners or sandwiches would not be considered a handler of eggs or egg products. Instead, if the manufacturer is located in Virginia, it would be a user of the eggs or egg products that it purchases from a handler and incorporates in the frozen dinners and sandwiches. The manufacturer would be required to pay the egg tax to the handler. If the manufacturer is located outside of Virginia, it would be a user of the eggs and egg products outside of Virginia; and therefore, it would not be subject to the egg tax. In both instances, the Taxpayer would not be subject to the egg tax on the frozen dinners and sandwiches that it purchases from the manufacturer.
I hope this response satisfactorily addresses the issues in your letter. In addition, I have enclosed Virginia Tax Bulletin 96-4, which clarifies the department's position of the treatment of the Virginia Egg Excise Tax. If there are further questions, please contact **** at **************.
Sincerely
Danny M. Payne
Tax Commissioner
OTP/10206N
Rulings of the Tax Commissioner