Tax Type
Retail Sales and Use Tax
Description
List of Exemptions, Exceptions and Exclusions
Topic
Exemptions
Date Issued
11-23-1998
November 23, 1998
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
In your letter of October 12, 1998, you request a ruling on behalf of ***** (the Partnership) and ***** (the LLC) that these entities are telecommunications companies as defined under Code of Virginia § 58.1-400.1 and are entitled to the exemption from the retail sales and use tax under Code of Virginia ***** § 58.1-609.3(3). This also addresses the protective claim filed by ***** on this matter. Copies of all cited references are enclosed.
FACTS
***** (the Company) is a general partner of the Partnership and controlling member of the LLC. The Partnership provides cellular mobile radio communications and the LLC provides personal communication services (PCS). Both of these entities have been granted licences by the Federal Communications Commission (FCC) to provide commercial mobile services within defined areas of Virginia. In constructing their communication networks, these entities purchased the necessary transmission and transceiving equipment and structures, switching equipment, and controlling software from various communications equipment vendors. In general, these entities have paid sales tax charged by vendors on these purchases.
The Partnership and LLC are subject to the minimum tax imposed on ***** telecommunications companies by Code of Virginia § 58.1-400.1 and annual reporting with the State Corporation Commission. Based on the facts presented, these entities maintain they are eligible for the exemption granted by Code of Virginia § 58.1 609.3(3). Accordingly, they request permission to seek refunds from their vendors for the erroneously paid taxes for the period September 1995 through September 1998.
RULING
Code of Virginia § 58.1-609.3(3) provides an exemption from the retail sales and use tax for:
Based on the information and licenses presented, both the Partnership and the LLC fall within the definition of "telecommunications company' pursuant to Code of Virginia § 58.1-400.1. Accordingly, both of these entities may purchase tangible personal property for use or consumption directly in the rendition of their public service exempt of the retail sales and use tax.
Vendor Refunds. The Partnership and the LLC may seek sales tax refunds from their vendors on the tangible personal property purchased for use or consumption directly in the rendition of public services for the period September 1995 through September 1998. Each refund request made to a vendor should include a copy of this letter and a signed and completed certificate of exemption, Form ST-20.
(Item #1 on Form ST-20 should be checked. The exemption certificate may be reproduced, or you may contact the department at (804) 236-2760 or (804) 236-2761 for additional copies of Form ST-20. Legitimate use of the exemption certificate is vital. For more information on exemption certificates, see Title 23 of the Virginia Administrative Code (VAC) 10210-280.) After the tax has been reimbursed by refund or credit memo, the vendor is entitled to recover the amount refunded by taking a deduction on Line 6e of its sales tax return. The vendor should maintain a copy of this letter with its file copy or worksheet of the return on which the deduction is taken.
Department refund. If a vendor refuses or is unable to issue a refund of taxes paid on purchases of exempt equipment, the Partnership and the LLC may seek these refunds directly from the department. In such instances, however, the dealer's discount taken by the vendor cannot be refunded since the department never received such tax moneys. If this refund method is used, please contact *****, Audit Supervisor of the department's ***** District Office, at *****.
Scope of exemption. The scope of the exemption cited above is set out in the public utilities regulation. See 23 VAC 10-210-3020. Although the exemption is broad, please note that it does not extend to tangible personal property used in administrative and managerial activities or to other activities in which tangible personal property is not used directly in the rendition of a public service. For example, the exemption does not apply to construction materials (concrete, structural steel, roofing, etc., which become permanently incorporated into the real property), fences, lighting systems, fire fighting and prevention systems, heating and cooling systems, landscaping, grounds ***** maintenance, and tools and equipment used in construction.
Protective claim filed pursuant to Code of Virginia § 58.1-1824. I find that the protective claim filed on October 26, 1998 coupled with your original refund request is timely filed and acceptable to the extent that the exemption applies as set forth in the above Scope of exemption section.
Dealers' records. It will be necessary for the Partnership and the LLC to maintain copies of all documentation in connection with these refunds for a period of three years from the time the refund is requested from the vendors. See 23 VAC 10210-470.
If you have any questions about this ruling, please contact ***** with the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
In your letter of October 12, 1998, you request a ruling on behalf of ***** (the Partnership) and ***** (the LLC) that these entities are telecommunications companies as defined under Code of Virginia § 58.1-400.1 and are entitled to the exemption from the retail sales and use tax under Code of Virginia ***** § 58.1-609.3(3). This also addresses the protective claim filed by ***** on this matter. Copies of all cited references are enclosed.
FACTS
***** (the Company) is a general partner of the Partnership and controlling member of the LLC. The Partnership provides cellular mobile radio communications and the LLC provides personal communication services (PCS). Both of these entities have been granted licences by the Federal Communications Commission (FCC) to provide commercial mobile services within defined areas of Virginia. In constructing their communication networks, these entities purchased the necessary transmission and transceiving equipment and structures, switching equipment, and controlling software from various communications equipment vendors. In general, these entities have paid sales tax charged by vendors on these purchases.
The Partnership and LLC are subject to the minimum tax imposed on ***** telecommunications companies by Code of Virginia § 58.1-400.1 and annual reporting with the State Corporation Commission. Based on the facts presented, these entities maintain they are eligible for the exemption granted by Code of Virginia § 58.1 609.3(3). Accordingly, they request permission to seek refunds from their vendors for the erroneously paid taxes for the period September 1995 through September 1998.
RULING
Code of Virginia § 58.1-609.3(3) provides an exemption from the retail sales and use tax for:
-
- Tangible personal property sold or leased to ... a telecommunications company as defined in 58.1-400.1 ... for use or consumption by such ... company ... directly in the rendition of its public....
"Telecommunications company' is defined in Code of Virginia § 58.1-400.1, in part, to mean:
- Tangible personal property sold or leased to ... a telecommunications company as defined in 58.1-400.1 ... for use or consumption by such ... company ... directly in the rendition of its public....
- ... a person authorized by the Federal Communications Commission to provide commercial mobile service as defined in §332(d)(1) of the Communications Act of 1934, as amended, where such service includes cellular mobile radio communications or personal communications services....
Based on the information and licenses presented, both the Partnership and the LLC fall within the definition of "telecommunications company' pursuant to Code of Virginia § 58.1-400.1. Accordingly, both of these entities may purchase tangible personal property for use or consumption directly in the rendition of their public service exempt of the retail sales and use tax.
Vendor Refunds. The Partnership and the LLC may seek sales tax refunds from their vendors on the tangible personal property purchased for use or consumption directly in the rendition of public services for the period September 1995 through September 1998. Each refund request made to a vendor should include a copy of this letter and a signed and completed certificate of exemption, Form ST-20.
(Item #1 on Form ST-20 should be checked. The exemption certificate may be reproduced, or you may contact the department at (804) 236-2760 or (804) 236-2761 for additional copies of Form ST-20. Legitimate use of the exemption certificate is vital. For more information on exemption certificates, see Title 23 of the Virginia Administrative Code (VAC) 10210-280.) After the tax has been reimbursed by refund or credit memo, the vendor is entitled to recover the amount refunded by taking a deduction on Line 6e of its sales tax return. The vendor should maintain a copy of this letter with its file copy or worksheet of the return on which the deduction is taken.
Department refund. If a vendor refuses or is unable to issue a refund of taxes paid on purchases of exempt equipment, the Partnership and the LLC may seek these refunds directly from the department. In such instances, however, the dealer's discount taken by the vendor cannot be refunded since the department never received such tax moneys. If this refund method is used, please contact *****, Audit Supervisor of the department's ***** District Office, at *****.
Scope of exemption. The scope of the exemption cited above is set out in the public utilities regulation. See 23 VAC 10-210-3020. Although the exemption is broad, please note that it does not extend to tangible personal property used in administrative and managerial activities or to other activities in which tangible personal property is not used directly in the rendition of a public service. For example, the exemption does not apply to construction materials (concrete, structural steel, roofing, etc., which become permanently incorporated into the real property), fences, lighting systems, fire fighting and prevention systems, heating and cooling systems, landscaping, grounds ***** maintenance, and tools and equipment used in construction.
Protective claim filed pursuant to Code of Virginia § 58.1-1824. I find that the protective claim filed on October 26, 1998 coupled with your original refund request is timely filed and acceptable to the extent that the exemption applies as set forth in the above Scope of exemption section.
Dealers' records. It will be necessary for the Partnership and the LLC to maintain copies of all documentation in connection with these refunds for a period of three years from the time the refund is requested from the vendors. See 23 VAC 10210-470.
If you have any questions about this ruling, please contact ***** with the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner