October 19, 2023
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This is in response to your letter submitted on behalf of ***** (the “Taxpayer”) requesting a ruling on the application of the retail sales and use tax on its purchase of sterling silver flatware. I apologize for the delay in responding to your correspondence.
FACTS
The Taxpayer purchased sterling silver flatware. The Taxpayer requests a ruling to determine if sterling silver flatware and hollowware meet the criteria for the exemption. The Taxpayer also asks if the Commonwealth of Virginia is legally allowed to mint and circulate its own currency and, if so, why the state has not done so.
RULING
Bullion and Legal Tender Exemption
Virginia Code § 58.1-609.1 19 provides an exemption from the retail sales and use tax for the following:
…gold, silver, or platinum bullion or legal tender coins whose sales price exceeds $1,000. Each piece of gold, silver, or platinum or legal tender coin need not exceed $1,000, provided that the sales price of one entire transaction of such pieces exceeds $1,000. "Gold, silver, or platinum bullion" means gold, silver, or platinum, and any combination thereof, that has gone through a refining process and is in a state or condition such that its value depends on its mass and purity and not on its form, numismatic value, or other value. Gold, silver, or platinum bullion may contain other metals or substances, provided that the other substances by themselves have minimal value compared with the value of the gold, silver, or platinum. "Legal tender coins" means coins of any metal content issued by a government as a medium of exchange or payment of debts. "Gold, silver, or platinum bullion" and "legal tender coins" do not include jewelry or works of art.
Virginia Tax Bulletin (VTB) 15-6, issued as Public Document (P.D.) 15-133 (6/26/2015) states that the exemption “extends to gold, silver, or platinum in the form of bars, ingots, or coins…” Further, the gold, silver, and platinum items must meet all of the following requirements:
• Must be refined;
• Must contain at least 90 percent gold, silver or platinum, or some combination of these metals; and
• The sales price of the item must fluctuate with and depend on the market price of the underlying precious metal, and not on the item’s rarity, condition, age, or other external factor.
The Department is bound by the doctrine of strict construction in interpreting the retail sales and use tax regulations. The Virginia courts have consistently held that exemptions from the tax must be strictly construed and where there is any doubt, that the doubt must be resolved against the person claiming the exemption. See Commonwealth v. Community Motor Bus Co., Inc., 214 Va. 155 (1973) and Golden Skillet Corp. v. Commonwealth, 214 Va. 276 (1972).
According to the Taxpayer, the sterling silver flatware and hollowware meet the first two requirements to qualify for the exemption. Please note that dealers of gold, silver, or platinum bullion are required to maintain proper documentation of exempt transactions, including the form and fine metal content of the precious metal bullion sold. See VTB 15-6. Based on the documentation provided by the Taxpayer, it is questionable whether the dealer in this case believes that the 90% requirement is met.
However, the issue presented for purposes of this ruling is whether the sterling silver flatware in this case was in a state or condition such that its value depended on its mass and purity and not on its form, numismatic value, or other value. Based on VTB 15-6, a key determinant is whether the sales price was subject to fluctuation solely based on the price of the underlying precious metal.
With their request, the Taxpayer provided a copy of a receipt showing a purchase of sterling silver flatware from an online auction cite. The receipt indicates the pattern and number of pieces of the flatware. Based on the description of the flatware, it appears likely that bids could have been made for a number of reasons. While the Taxpayer claims he was only interested on the value of the silver, other browsers or bidders may have been more interested in the pattern, age, or potential use of the flatware. Because the seller did not appear to limit the sales price to fluctuation based on the price of the underlying precious metal, the transaction is not in the form required to be eligible for the exemption for bullion and legal tender.
Legal Currency
The Taxpayer’s second question regards the legality of state issued currency. As this is not a tax issue under the jurisdiction of the Department, this ruling is unable to address this question. I would suggest that the Taxpayer contact the Virginia Department of the Treasury for information related to this question.
This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.
The Code of Virginia sections cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department’s web site. If you have any questions about this response, you may contact ***** in the Department’s Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/3907.G