Tax Type
Retail Sales and Use Tax
Description
Leases and rentals; Sale and leaseback; Resales; Resale documentation
Topic
Taxability of Persons and Transactions
Date Issued
08-30-1999
August 30, 1999
Dear ***
This will reply to your letter of June 29, 1999, in which you request a ruling on the application of the retail sales and use tax to sale/leaseback transactions.
FACTS
***** (the "Taxpayer') sells a computer system to its customer, whose intention is to resell the computer system to a leasing company for subsequent taxable leaseback. The Taxpayer inquires as to what resale documentation is required to relieve the Taxpayer from the responsibility of collecting the tax on sales to its customers.
RULING
Code of Virginia Sec. 58.1-609.10(3) provides a sales tax exemption for "[t]angible personal property for future use by a person for taxable lease or rental as an established business or part of an established business, or incidental or germane to such business, including a simultaneous purchase and taxable leaseback.'
In the situation described in your letter, the party making the initial purchase from the Taxpayer is required to furnish a resale exemption certificate in order to purchase the computer system exempt of the tax. The purchaser should complete a resale exemption certificate, Form ST-10, with Item #1 marked and submit it to the Taxpayer. In addition, the purchaser must provide written notification to the Taxpayer that the purchaser intends to involve a third party purchaser. Such notification should be given ***** to the Taxpayer prior to the passage of title of the property. If the purchaser is not located in Virginia and is not registered to collect the Virginia sales and use tax, it may enter its out-of-state registration number on the Form ST-10 and indicate on the form the state for which the registration applies.
I am enclosing several Public Documents and the Virginia Sales and Use Tax Expenditure Study which further discuss sale/leaseback transactions. I trust that the information provided will address your concerns. However, if you have additional questions, please contact ***** in the department's Office of Tax Policy at *****.
Dear ***
This will reply to your letter of June 29, 1999, in which you request a ruling on the application of the retail sales and use tax to sale/leaseback transactions.
FACTS
***** (the "Taxpayer') sells a computer system to its customer, whose intention is to resell the computer system to a leasing company for subsequent taxable leaseback. The Taxpayer inquires as to what resale documentation is required to relieve the Taxpayer from the responsibility of collecting the tax on sales to its customers.
RULING
Code of Virginia Sec. 58.1-609.10(3) provides a sales tax exemption for "[t]angible personal property for future use by a person for taxable lease or rental as an established business or part of an established business, or incidental or germane to such business, including a simultaneous purchase and taxable leaseback.'
In the situation described in your letter, the party making the initial purchase from the Taxpayer is required to furnish a resale exemption certificate in order to purchase the computer system exempt of the tax. The purchaser should complete a resale exemption certificate, Form ST-10, with Item #1 marked and submit it to the Taxpayer. In addition, the purchaser must provide written notification to the Taxpayer that the purchaser intends to involve a third party purchaser. Such notification should be given ***** to the Taxpayer prior to the passage of title of the property. If the purchaser is not located in Virginia and is not registered to collect the Virginia sales and use tax, it may enter its out-of-state registration number on the Form ST-10 and indicate on the form the state for which the registration applies.
I am enclosing several Public Documents and the Virginia Sales and Use Tax Expenditure Study which further discuss sale/leaseback transactions. I trust that the information provided will address your concerns. However, if you have additional questions, please contact ***** in the department's Office of Tax Policy at *****.
Rulings of the Tax Commissioner