Tax Type
Motor Vehicle Tax
Description
Long-term lease of a motor vehicle subject to the Virginia motor vehicle sales and use tax
Topic
Collection of Tax
Taxable Transactions
Date Issued
12-13-2012
December 13, 2012
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This is in response to your letter in which you request a ruling with respect to the application of the retail sales and use tax to local personal property taxes paid by ***** (the "Taxpayer"), and passed on as a charge to Virginia residents who lease motor vehicles from the Taxpayer.
FACTS
The Taxpayer leases motor vehicles on a long-term basis to Virginia residents ("lessees"). When a local personal property tax is levied to the Taxpayer, the Taxpayer collects payment from its lessees for the tax, which is separately stated on the lease billing statements. The Taxpayer claims that the local personal property tax that is separately stated on its invoices is exempt from the retail sales and use tax pursuant to an exclusion set out in the term "sales price" as defined in Va. Code § 58.1-602.
DETERMINATION
Virginia Code § 58.1-602 is the definitions statute for Virginia retail sales and use tax purposes and defines the term "sales price" as "any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property, including any services that are a part of the sale . . . ." For Virginia retail sales and use tax purposes, the term "sales price" excludes, among other things, "separately stated local property taxes collected." While the Virginia retail sales and use tax applies to tangible personal property, it is not necessarily applicable to every piece of tangible personal property used, consumed, stored or distributed in Virginia. For instance, motor vehicles that are subject to the Virginia motor vehicle sales and use tax are not subject to the Virginia retail sales and use tax. See Title 23 of the Virginia Administrative Code 10-210-990.
Because a long-term lease of a motor vehicle for highway use is generally in effect for a number of years, such lease does not qualify as a "rental" as that term was formerly defined in Va. Code § 58.1-2401 (the definitions provision of the Virginia Motor Vehicle Sales and Use Tax Act) prior to July 1, 2012, or as it is now defined in Va. Code § 58.1-1735 (the definitions provision of the newly enacted Virginia Motor Vehicle Rental Tax Act). Rather, a long-term lease of a motor vehicle remains subject to the provisions of the Virginia motor vehicle sales and use tax. For this reason, such leases are not subject to the Virginia motor vehicle rental tax or the Virginia retail sales and use tax administered by the Department of Taxation. Because the motor vehicle sales and use tax is administered by the Department of Motor Vehicles ("DMV"), I am unable to respond to the Taxpayer's tax inquiry. The Taxpayer may send its tax inquiry to the attention of Rick Holcomb, DMV Commissioner, at the Virginia Department of Motor Vehicles, Post Office Box 27412, Richmond, Virginia 23269.
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 and regulation cited 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 ruling, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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- Craig M. Burns
Tax Commissioner
- Craig M. Burns
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AR/1-5179263994.R
Rulings of the Tax Commissioner