Tax Type
Retail Sales and Use Tax
Description
Occasional sales; Government entity making sales; Marine terminal tangible personal property
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
02-19-1998
February 19, 1998
Dear****************:
This is in response to your letter of November 11, 1997, in which you seek correction of a sales and use tax assessment issued to ***** (the ``Taxpayer') for the period May 1991 through December 1996. Also of concern, but unrelated to the audit assessment, is a consumer use tax payment remitted by the Taxpayer to Virginia for the period July 1997. You maintain this consumer use tax was erroneously paid.
FACTS
The Taxpayer provides stevedoring services at a Virginia marine terminal. The terminal is operated under the authority of the Virginia Port Authority through its operating subsidiary, Virginia International Terminals (VIT). The Taxpayer rented certain equipment from VIT during the audit period and used this equipment in stevedoring activities. The Taxpayer maintains that the rental of this equipment is exempt from the tax under Code of Virginia Sec. 58.1-609.1(10) which provides an exemption for certain property used at Virginia marine terminals.
The Taxpayer also protests the tax assessed on fixed assets purchased from a stevedoring company located in South Carolina and subsequently transferred to Virginia. You indicate that the equipment in question was purchased in connection with the purchase of all the assets of the South Carolina company. As such, you maintain that these purchases are exempt under the occasional sale exemption.
DETERMINATION
VIT Transactions
Certain transactions involving the Virginia Port Authority and VIT are exempt from the tax under Code of Virginia Sec. 58.1-609.1(10). This exemption applies to:
Under the doctrine of strict construction, I find that this exemption is limited to tangible personal property owned by or leased to the Virginia Port Authority and tangible personal property acquired or used by the VIT (which is a nonstock, nonprofit corporation that operates terminals on behalf of the Virginia Port Authority). The exemption, however, would not extend to tangible personal property sold, leased, or rented to private contractors such as the Taxpayer, regardless that the seller or lessor is the Virginia Port Authority or VIT.
In this regard, the exemption available to VIT is limited to certain tangible personal property purchased by that entity but does not extend to sales made by that entity. Accordingly, VIT is required to collect and remit the tax on those taxable sales, regardless that VIT may be operating on behalf of the Virginia Port Authority. Indeed, as explained in the enclosed regulation, sales by the Commonwealth, its agencies (such as the Virginia Port Authority) and political subdivisions are generally taxable. Government entities making such sales are required to register with the department and collect and remit the sales tax on its sales. See Title 23 of the Virginia Administrative Code (VAC) 10-210-691.
Occasional Sales Transactions
The occasional sales exemption is addressed in 23 VAC 10-210-1080. As noted therein, the exemption applies to the sale or exchange of ``all of substantially all the assets of any business' or to the liquidation of any business. This regulation also indicates that any person who purchases tangible personal property in an occasional sale transaction shall ``not be liable for any use tax on such purchase.'
I understand that the contested equipment purchased by the Taxpayer was purchased from a company which engaged in an occasional sale as defined above. I further understand that the State of South Carolina deemed the sale of equipment to be an exempt occasional sale. Accordingly, the Taxpayer's use of these items in Virginia is exempt and will be removed from the assessment.
July 1997 Consumer Use Tax Payment
The Taxpayer filed a consumer use tax return for the period July 1997 and remitted the tax on the purchase of a truck crane purchased from a California seller. You indicate that the crane was not shipped to or used in Virginia, but was rather shipped to the Taxpayer's parent corporation facility in Texas for use at that facility.
I have reviewed the purchase and shipping documents submitted with your correspondence and agree that consumer use was erroneously remitted to Virginia. Accordingly, the Taxpayer is due a refund of this erroneously paid consumer use tax.
Summary
The assessment will be revised based on this determination and as shown on the attached calculations. Further, the erroneous consumer use tax payment discussed above will be applied to this revised assessment. A bill for the balance will be sent to the Taxpayer as soon as practicable. No additional interest will accrue on the outstanding balance provided the bill is paid within 30 days.
Please contact ***** in the department's Office of Tax Policy at ***** if you have any questions about this letter.
Dear****************:
This is in response to your letter of November 11, 1997, in which you seek correction of a sales and use tax assessment issued to ***** (the ``Taxpayer') for the period May 1991 through December 1996. Also of concern, but unrelated to the audit assessment, is a consumer use tax payment remitted by the Taxpayer to Virginia for the period July 1997. You maintain this consumer use tax was erroneously paid.
FACTS
The Taxpayer provides stevedoring services at a Virginia marine terminal. The terminal is operated under the authority of the Virginia Port Authority through its operating subsidiary, Virginia International Terminals (VIT). The Taxpayer rented certain equipment from VIT during the audit period and used this equipment in stevedoring activities. The Taxpayer maintains that the rental of this equipment is exempt from the tax under Code of Virginia Sec. 58.1-609.1(10) which provides an exemption for certain property used at Virginia marine terminals.
The Taxpayer also protests the tax assessed on fixed assets purchased from a stevedoring company located in South Carolina and subsequently transferred to Virginia. You indicate that the equipment in question was purchased in connection with the purchase of all the assets of the South Carolina company. As such, you maintain that these purchases are exempt under the occasional sale exemption.
DETERMINATION
VIT Transactions
Certain transactions involving the Virginia Port Authority and VIT are exempt from the tax under Code of Virginia Sec. 58.1-609.1(10). This exemption applies to:
-
- Tangible personal property used in and about a marine terminal under the supervision of the Virginia Port Authority for handling cargo, merchandise, freight and equipment. This exemption shall apply to agents, lessees, sublessees or users of tangible personal property owned by or leased to the Virginia Port Authority and to property acquired or used by the Authority or by a nonstock, nonprofit corporation that operates a marine terminal or terminals on behalf of the Authority.
- Tangible personal property used in and about a marine terminal under the supervision of the Virginia Port Authority for handling cargo, merchandise, freight and equipment. This exemption shall apply to agents, lessees, sublessees or users of tangible personal property owned by or leased to the Virginia Port Authority and to property acquired or used by the Authority or by a nonstock, nonprofit corporation that operates a marine terminal or terminals on behalf of the Authority.
Under the doctrine of strict construction, I find that this exemption is limited to tangible personal property owned by or leased to the Virginia Port Authority and tangible personal property acquired or used by the VIT (which is a nonstock, nonprofit corporation that operates terminals on behalf of the Virginia Port Authority). The exemption, however, would not extend to tangible personal property sold, leased, or rented to private contractors such as the Taxpayer, regardless that the seller or lessor is the Virginia Port Authority or VIT.
In this regard, the exemption available to VIT is limited to certain tangible personal property purchased by that entity but does not extend to sales made by that entity. Accordingly, VIT is required to collect and remit the tax on those taxable sales, regardless that VIT may be operating on behalf of the Virginia Port Authority. Indeed, as explained in the enclosed regulation, sales by the Commonwealth, its agencies (such as the Virginia Port Authority) and political subdivisions are generally taxable. Government entities making such sales are required to register with the department and collect and remit the sales tax on its sales. See Title 23 of the Virginia Administrative Code (VAC) 10-210-691.
Occasional Sales Transactions
The occasional sales exemption is addressed in 23 VAC 10-210-1080. As noted therein, the exemption applies to the sale or exchange of ``all of substantially all the assets of any business' or to the liquidation of any business. This regulation also indicates that any person who purchases tangible personal property in an occasional sale transaction shall ``not be liable for any use tax on such purchase.'
I understand that the contested equipment purchased by the Taxpayer was purchased from a company which engaged in an occasional sale as defined above. I further understand that the State of South Carolina deemed the sale of equipment to be an exempt occasional sale. Accordingly, the Taxpayer's use of these items in Virginia is exempt and will be removed from the assessment.
July 1997 Consumer Use Tax Payment
The Taxpayer filed a consumer use tax return for the period July 1997 and remitted the tax on the purchase of a truck crane purchased from a California seller. You indicate that the crane was not shipped to or used in Virginia, but was rather shipped to the Taxpayer's parent corporation facility in Texas for use at that facility.
I have reviewed the purchase and shipping documents submitted with your correspondence and agree that consumer use was erroneously remitted to Virginia. Accordingly, the Taxpayer is due a refund of this erroneously paid consumer use tax.
Summary
The assessment will be revised based on this determination and as shown on the attached calculations. Further, the erroneous consumer use tax payment discussed above will be applied to this revised assessment. A bill for the balance will be sent to the Taxpayer as soon as practicable. No additional interest will accrue on the outstanding balance provided the bill is paid within 30 days.
Please contact ***** in the department's Office of Tax Policy at ***** if you have any questions about this letter.
Rulings of the Tax Commissioner