Tax Type
Retail Sales and Use Tax
Description
Exemption Certificates
Topic
Exemptions
Date Issued
10-08-1998
October 8, 1998
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This will reply to your letter in which you request a ruling on behalf of your client, *****, (the "Taxpayer'). I apologize for the delay in responding to your letter.
FACTS
The Taxpayer conducts professional training seminars throughout the country and purchases printed materials which are provided to seminar participants. The cost of the materials is included in the price of the seminar. Most of the seminar materials are purchased and delivered to the Taxpayer's headquarters in Virginia. The Taxpayer pays Virginia sales and use tax on the materials at the time of purchase. When the printed materials are needed for a seminar in another state, the materials are shipped to the seminar site where they are distributed to seminar participants.
The Taxpayer is registered in a number of states where it conducts the seminars and has encountered difficulties in accounting for and paying use taxes to some of these states. Specifically, the Taxpayer has had difficulty taking credits in some states for sales and use taxes paid to Virginia. The Taxpayer seeks permission to purchase the seminar materials exempt of Virginia sales and use tax and allocate its use tax liability to the state where the materials are distributed. The Taxpayer will pay Virginia use tax on seminar materials that are distributed in states where the Taxpayer is not registered for use tax.
RULING
The Taxpayer's request is based on the exemption found in Code of Virginia Sec. 58.1-609.6(4) for:
If any of the language in this exemption would apply to the Taxpayer's seminar materials, it would be in the category of "similar printed materials.' The term "similar printed materials' is defined in Title 23 of the Virginia Administrative Code (VAC) 10-210-260 (copy enclosed) as "printed materials used for promotional purposes, except administrative supplies.' The Taxpayer uses the printed seminar materials as an instructional tool in the provision of its training seminars. The seminar materials are not used to promote the Taxpayer's products, services, or corporate image. Therefore, the seminar materials do not meet the definition of "similar printed materials' and do not qualify for the exemption under Code of Virginia Sec. 58.1-609.6(4).
The Taxpayer states that it takes physical possession of the seminar materials in Virginia prior to their distribution to other states. Even though the Taxpayer intends to distribute some of the seminar materials in other states, this does not preclude the imposition of the sales and use tax on the seminar materials. This position is ***** supported by the opinion of the Virginia Supreme Court in Commonwealth v. Miller-Morton Co., 220 Va. 852, 263 S.E.2d 413 (1980), which held taxable the storage of tangible personal property in Virginia even though the property would ultimately be shipped outside of the state. The court stated that "if a taxable event occurs in Virginia, subsequent delivery of property outside this state does not immunize the taxable event.'
The enclosed copy of P. D. 94-103 (4/11 /94) also explains the department's policy. In this case, various items were purchased for use at a convention in another state. The taxpayer took possession of the items in Virginia. The items were held taxable because the taxpayer used the materials to conduct the convention; thus, the materials were deemed to be analogous to administrative supplies. This letter also points out the department's longstanding policy, which is based on Virginia case law, that exemptions from the tax are strictly construed with any doubts resolved against the person claiming the exemption.
Based on the above, the Taxpayer is properly paying Virginia sales and use taxes on the printed materials purchased and delivered to its Virginia location. The Taxpayer must continue to pay Virginia sales and use tax on purchases of printed seminar materials. The Taxpayer should seek a credit from those states where it incurs a liability on the distribution of seminar materials equal to the amount of Virginia sales and use taxes paid on the materials.
I regret I am unable to provide you with a more favorable reply to your request. If you have questions, please contact ***** in the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13752S
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This will reply to your letter in which you request a ruling on behalf of your client, *****, (the "Taxpayer'). I apologize for the delay in responding to your letter.
FACTS
The Taxpayer conducts professional training seminars throughout the country and purchases printed materials which are provided to seminar participants. The cost of the materials is included in the price of the seminar. Most of the seminar materials are purchased and delivered to the Taxpayer's headquarters in Virginia. The Taxpayer pays Virginia sales and use tax on the materials at the time of purchase. When the printed materials are needed for a seminar in another state, the materials are shipped to the seminar site where they are distributed to seminar participants.
The Taxpayer is registered in a number of states where it conducts the seminars and has encountered difficulties in accounting for and paying use taxes to some of these states. Specifically, the Taxpayer has had difficulty taking credits in some states for sales and use taxes paid to Virginia. The Taxpayer seeks permission to purchase the seminar materials exempt of Virginia sales and use tax and allocate its use tax liability to the state where the materials are distributed. The Taxpayer will pay Virginia use tax on seminar materials that are distributed in states where the Taxpayer is not registered for use tax.
RULING
The Taxpayer's request is based on the exemption found in Code of Virginia Sec. 58.1-609.6(4) for:
-
- Catalogs, letters, brochures, reports, and similar printed materials, except administrative supplies, the envelopes, containers and labels used for packaging and mailing same ... when stored for twelve months or less in the ***** Commonwealth and distributed for use without the Commonwealth.
If any of the language in this exemption would apply to the Taxpayer's seminar materials, it would be in the category of "similar printed materials.' The term "similar printed materials' is defined in Title 23 of the Virginia Administrative Code (VAC) 10-210-260 (copy enclosed) as "printed materials used for promotional purposes, except administrative supplies.' The Taxpayer uses the printed seminar materials as an instructional tool in the provision of its training seminars. The seminar materials are not used to promote the Taxpayer's products, services, or corporate image. Therefore, the seminar materials do not meet the definition of "similar printed materials' and do not qualify for the exemption under Code of Virginia Sec. 58.1-609.6(4).
The Taxpayer states that it takes physical possession of the seminar materials in Virginia prior to their distribution to other states. Even though the Taxpayer intends to distribute some of the seminar materials in other states, this does not preclude the imposition of the sales and use tax on the seminar materials. This position is ***** supported by the opinion of the Virginia Supreme Court in Commonwealth v. Miller-Morton Co., 220 Va. 852, 263 S.E.2d 413 (1980), which held taxable the storage of tangible personal property in Virginia even though the property would ultimately be shipped outside of the state. The court stated that "if a taxable event occurs in Virginia, subsequent delivery of property outside this state does not immunize the taxable event.'
The enclosed copy of P. D. 94-103 (4/11 /94) also explains the department's policy. In this case, various items were purchased for use at a convention in another state. The taxpayer took possession of the items in Virginia. The items were held taxable because the taxpayer used the materials to conduct the convention; thus, the materials were deemed to be analogous to administrative supplies. This letter also points out the department's longstanding policy, which is based on Virginia case law, that exemptions from the tax are strictly construed with any doubts resolved against the person claiming the exemption.
Based on the above, the Taxpayer is properly paying Virginia sales and use taxes on the printed materials purchased and delivered to its Virginia location. The Taxpayer must continue to pay Virginia sales and use tax on purchases of printed seminar materials. The Taxpayer should seek a credit from those states where it incurs a liability on the distribution of seminar materials equal to the amount of Virginia sales and use taxes paid on the materials.
I regret I am unable to provide you with a more favorable reply to your request. If you have questions, please contact ***** in the Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13752S
Rulings of the Tax Commissioner