Tax Type
Retail Sales and Use Tax
Description
List of Exemptions, Exceptions and Exclusions
Topic
Exemptions
Date Issued
10-08-1998
October 8, 1998
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
In your letter of August 19, 1998, you seek a ruling on the application of the retail sales and use tax to a drop shipment transaction.
FACTS
Your company (Company A) is located in Texas and manufacturers telecommunications equipment for sale. You indicate that Company A has nexus with Virginia and is registered with Virginia. Company A sells equipment to Company B which is located outside Virginia but not registered in Virginia. Company B directs Company A to ship the equipment to its customer, Company C, which is located in Virginia. Company A ships the equipment by common carrier.
Company C may or may not be registered with Virginia and may resell or use the equipment shipped to them. You ask whether the sale by Company A to Company B is an exempt sale.
RULING
Code of Virginia Sec. 58.1-603 imposes the sales tax upon "every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth....' Code of Virginia Sec. 58.1-602 defines the term "retail sale' to mean "a sale to any person for any purpose other than for resale in the form of tangible personal property....' (Emphasis added.)
Since Company B is purchasing for resale, Company A is not required to collect and remit the Virginia sales or use tax, provided Company A receives a completed and signed resale exemption certificate from Company B. Resale exemption certificates received from customers should be retained indefinitely in Company A's records.
For a further discussion of what constitutes a valid resale exemption certificate, see Public Document (P.D.) 97-95(2/21/97), copy enclosed. See also the department's regulation on exemption certificates set out under Title 23 of the Virginia Administrative Code (VAC) 10-210-280, copy enclosed.
I would note that after a search on the department's database, we could not find an "active' use tax registration for Company A. If Company A is making taxable sales to Virginia customers, it must collect and remit the Virginia sales or use tax to the department.
If you have any questions regarding this matter, please contact ***** of the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/17246R
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
In your letter of August 19, 1998, you seek a ruling on the application of the retail sales and use tax to a drop shipment transaction.
FACTS
Your company (Company A) is located in Texas and manufacturers telecommunications equipment for sale. You indicate that Company A has nexus with Virginia and is registered with Virginia. Company A sells equipment to Company B which is located outside Virginia but not registered in Virginia. Company B directs Company A to ship the equipment to its customer, Company C, which is located in Virginia. Company A ships the equipment by common carrier.
Company C may or may not be registered with Virginia and may resell or use the equipment shipped to them. You ask whether the sale by Company A to Company B is an exempt sale.
RULING
Code of Virginia Sec. 58.1-603 imposes the sales tax upon "every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth....' Code of Virginia Sec. 58.1-602 defines the term "retail sale' to mean "a sale to any person for any purpose other than for resale in the form of tangible personal property....' (Emphasis added.)
Since Company B is purchasing for resale, Company A is not required to collect and remit the Virginia sales or use tax, provided Company A receives a completed and signed resale exemption certificate from Company B. Resale exemption certificates received from customers should be retained indefinitely in Company A's records.
For a further discussion of what constitutes a valid resale exemption certificate, see Public Document (P.D.) 97-95(2/21/97), copy enclosed. See also the department's regulation on exemption certificates set out under Title 23 of the Virginia Administrative Code (VAC) 10-210-280, copy enclosed.
I would note that after a search on the department's database, we could not find an "active' use tax registration for Company A. If Company A is making taxable sales to Virginia customers, it must collect and remit the Virginia sales or use tax to the department.
If you have any questions regarding this matter, please contact ***** of the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/17246R
Rulings of the Tax Commissioner