Tax Type
Retail Sales and Use Tax
Description
Safety Apparel Used by Production Line Employees
Topic
Manufacturing Exemption
Taxability of Persons and Transactions
Date Issued
12-09-2004
December 9, 2004
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This will reply to your letter in which you seek correction of a retail sales and use
tax assessment issued to ***** (the "Taxpayer"), for the period March 2001 through February 2004. I apologize for the delay in the Department's response.
FACTS
The Taxpayer is a manufacturer of marble products. The Taxpayer is contesting the assessment of use tax on purchases of Tyvek coveralls and rubber boots furnished to production line employees. The production line employees spray molds, mix the raw materials for the marble and pour the marble mixture into molds. The Taxpayer maintains that the production line employees wear the coveralls and boots to protect the skin from exposure to various chemicals that are used during the production activities described above.
DETERMINATION
Title 23 of the Virginia Administrative Code (VAC) 10-210-920 discusses the manufacturing exemption and states that an exemption from sales and use tax applies to safety apparel furnished by manufacturers gratuitously to production line employees. Public Document 88-95 (5/10/88) discusses this exemption and provides that safety apparel used by production line personnel to protect their clothing does not qualify for exemption because the apparel is provided as a convenience to employees. However, apparel worn by production line employees primarily for the safety of the employees is exempt if provided gratuitously by the employer.
This exemption applies only to safety apparel furnished to and worn by production line personnel. Safety apparel worn by personnel that are not engaged in production activities is taxable. This includes apparel worn by employees performing maintenance activities on production equipment and machinery.
Based on the information provided, the Taxpayer provides the Tyvek coveralls and rubber boots to production line employees to prevent chemical burns caused by materials used to manufacture the Taxpayer's marble products. The safety apparel is provided to employees at no charge. In accordance with Title 23 VAC 10-210-920, the Tyvek coveralls and rubber boots qualify for the manufacturing exemption. The audit assessment will be revised accordingly. Because the Taxpayer has paid the uncontested portion of the audit assessment, the balance of the assessment will be abated.
The regulation and public document cited are available on-line in the
Department's Tax Policy Library, located at www.policylibrary.tax.virginia.gov. If you
have any questions concerning this determination, please contact ***** in the
Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
Kenneth W. Thorson
- Sincerely,
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AR/50999S
Rulings of the Tax Commissioner