Tax Type
Retail Sales and Use Tax
Description
Publishing and broadcasting; Cable television
Topic
Taxability of Persons and Transactions
Date Issued
10-25-1996
October 25, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear***********
This is in response to your letter of June 28, 1996 in which you seek correction of a sales and use tax assessment issued to ********(the "Taxpayer"). I note that the entire assessment has been paid.
FACTS
The Taxpayer operates as a cable television provider. An audit for the period November 1989 through March 1996 resulted in an assessment for untaxed purchases of equipment and supplies used by the Taxpayer in providing its services.
The Taxpayer protests the assessment on certain purchases of tangible personal property and maintains that these items are broadcasting equipment and accessories to the equipment directly used to disseminate signals into the air.
DETERMINATION
Code of Virginia § 58.1-609.6(2) provides an exemption from the tax for:
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- Broadcasting equipment and parts and accessories thereto and towers used or to be used by commercial radio and television companies, cable television systems ... or concerns which are under the regulation and supervision of the Federal Communications Commission and amplification, transmission and distribution equipment used or to be used by cable television systems or video dialtone systems.
The protested items in this case include, for example, converters, computer equipment and descramblers. Without a detailed description of how these items are used, it is difficult to determine whether or not they constitute exempt amplification, transmission or distribution equipment. It does appear, however, that at least some of the protested items are taxable. For example, it has been previously determined that tools, cable ties, cable clips, and wall plates are not directly used in an exempt activity.
I have enclosed a number or prior determinations which discuss the application of the tax to purchases by cable television operations and which directly address some of your protested items. I have also enclosed an analysis of the broadcasting exemption taken from the department's 1991 Virginia Sales and Use Tax Expenditure Study.
Code of Virginia § 58.1-205 indicates that any assessment of a tax by the department shall be deemed prima facie correct. Accordingly, and based on the information currently before me, the contested items were correctly assessed. Nevertheless, I will certainly review any additional information which you can provide on the contested purchases.
Please contact ****** in my Office of Tax Policy at ****** if you have any questions regarding this letter.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11671I
Rulings of the Tax Commissioner