Tax Type
Retail Sales and Use Tax
Description
Interstate commerce exception to Virginia sales tax
Topic
Taxable Transactions
Taxable Income
Date Issued
05-30-2014
May 30, 2014
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This is in response to your letter in which you request a ruling on the application of the retail sales and use tax to sales made by a Virginia corporation.
FACTS
A Virginia corporation (Seller) has offices and headquarters in Virginia. The Seller sells to buyers that are headquartered in Virginia with centralized purchasing facilities in Virginia. The buyers' facilities in Virginia issue purchase orders for the buyers' locations in other states. Payments made to Seller are usually made from the buyers' Virginia facilities. Rarely is payment to Seller made from out-of-state facilities. All scheduling, logistics and correspondence relating thereto occurs in Seller's Virginia office via communication with buyers' Virginia offices, except for occasional communication with buyers' out-of-state locations to schedule the installations.
The products are shipped to buyers' facilities located outside of Virginia directly from manufacturers all of which are located outside of Virginia. No products are produced in or shipped from Virginia.
RULING
Based on the facts presented above, you pose several questions. Your questions are presented below along with my responses.
Question 1
Are the sales described above subject to Virginia sales tax?
Response: No. Because the products never enter Virginia and are transferred completely outside Virginia, such sales are not within Virginia's jurisdiction to impose the retail sales tax.
Question 2
Do these transactions qualify for the interstate commerce exception to Virginia sales tax?
Response: Yes. Pursuant to Title 23 of the Virginia Administrative Code 10-210-780 A, a sale in interstate or foreign commerce occurs when title or possession to the property being sold passes to the purchaser outside of Virginia and no use of the property is made within Virginia. In this case, the passage of title and possession occurs outside of Virginia. Also see Va. Code § 58.1-609.10 4. This appears consistent with Transaction #43 in Bloomingdale's Inc. v. Virginia Department of Taxation (Law No. CL05T00891-00-1/07-3860, 2007).
Question 3
Do these transactions qualify for any other exception relating to Virginia sales tax?
Response: No. Based on the facts presented, I am not aware of any other applicable exemption that would fit the circumstances presented. If one is found, a ruling may be requested to determine if the exemption is applicable.
I trust the above has responded to your inquiries. This response is based on the facts provided as summarized above. Any change in the facts or the introduction of new facts may lead to a different result.
The Code of Virginia section 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, please 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
AR/1-5576827861.R
Rulings of the Tax Commissioner