Tax Type
Retail Sales and Use Tax
Description
Agriculture; Golf carts for farm use
Topic
Taxability of Persons and Transactions
Date Issued
01-30-1997
January 30, 1997
Re: Request for Ruling: Retail Sales & Use Tax
Dear***************
This is in reply to your letter of January 3, 1997 in which you seek a ruling on behalf of (the "Taxpayer"), on the applicability of the sales and use tax to golf car used by farmers for agricultural uses.
FACTS
The Taxpayer sells reconditioned and customized golf cars for non-golf course use. Many of the Taxpayer's customers are farmers who may use such cars for the transportation of eggs from a laying room to an egg room house, in checking on cows, herding the cows in from the fields, hauling hay to feed livestock, and other such farm uses. The farmers are seeking exemption of the tax when purchasing the golf cars.
The Taxpayer, accordingly, seeks written confirmation that the sales of such cars for farm use are exempt of the tax.
RULING
General Rule is Taxation. Code of Virginia § 58.1-603 imposes the sales tax on every person who sells or leases tangible personal property in Virginia. Code of Virginia § 58.1-602 defines a sale to mean "any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property ... for a consideration."
Exemptions are the Exception. Code of Virginia § 58.1-609.2(1) provides an exemption from the retail sales and use tax for "Commercial feeds; ... farm machinery; ... and agricultural supplies provided the same are sold to and purchased by farmers for use in agricultural production, ... for market."
Farmers will have many different uses for machinery or supplies used in a farming operation. Some uses may or may not qualify as a use in agricultural production for market. Virginia Regulation (VR) 630-10-20, copy enclosed, explains that the burden of proving that the tax does not apply to the sales rests with the seller unless he takes, in good faith from the purchaser, a certificate of exemption indicating that the property is exempt under the law. The regulation further provides that "an exemption certificate cannot be used to make a tax-free purchase of any item of tangible personal property not covered by the exact wording of the certificate." This section further states that "Reasonable care and judgment must be exercised by all concerned to prevent the giving or receiving of false, fraudulent or bad faith exemption certificates."
When claiming the agricultural exemption available to farmers, each farmer must complete and sign the Certificate of Exemption Form ST-18, and furnish it to the seller. The seller is required to maintain and preserve each exemption certificate, accepted in good faith, for a minimum of three years. Accordingly, the sale of golf cars may be made exempt of the tax when purchased by a farmer for use in agricultural production, and a properly completed Form ST-18 is presented. Without the exemption certificate, the sale of tangible personal property to a farmer is taxable.
I trust that this answers your questions. If you should have any additional questions regarding this matter, please contact ******** of the department's Office of Tax Policy at***********
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12036Q
Rulings of the Tax Commissioner