Tax Type
Intangible Personal Property Tax
Description
Wire services, Professional service transactions
Topic
Exemptions
Date Issued
05-03-1984
May 3, 1984
Re: § 58-1118 Application
Capital Not Otherwise Taxed
For the Years 1980, 1981, and 1982
Use Tax
For the Period June 1, 1978 through January 31, 1983
Dear **************
This is in reply to your letters in which you made application pursuant to § 58-1118 of the Code of Virginia for correction of State capital tax and use tax assessed against the taxpayer as captioned above.
Capital Not Otherwise Taxed
FACTS
The Department, in audit, included the value of affiliation agreements in the other taxable property category for 1980, 1981, and 1982. Taxpayer contends that the affiliation agreement represents a contract where an affiliate agrees to carry a specified amount of daily programming provided by the taxpayer. The taxpayer's operations are divided into five regions with Southwest and West regions administered by individuals located in [Texas] and [California] respectively, and the remaining regions administered from *****, Virginia. Taxpayer contends that the regional manager has full responsibility for his region and affiliation contracts. Taxpayer believes that § 58-415 of the Code of Virginia provides that the affiliation contracts controlled by the regional managers located in [Texas] and [California] obtain business situs at these branch offices and should not be subject to the Virginia tax on capital.
DETERMINATION
From the information presented, the taxpayer has substantiated that the business situs of affiliation contracts controlled by the branch offices in[Texas] and [California] are not includible in the value of Virginia capital not otherwise taxed and such contracts will be removed from the audit findings.
Use Tax
FACTS
Taxpayer is a commercial radio network. Use tax was assessed on cabinets and racks which hold equipment used for broadcasting, a phone coupler used to broadcast phone calls over the air and a sports ticker which is a wire service used to receive information which is broadcast. Taxpayer contests the assessment on the above property on the basis that the exemption under § 1-88 of the Virginia Retail Sales and Use Tax Regulations is applicable.
DETERMINATION
Virginia Code § 58-441.6(j) extends an exemption from the sales and use tax to:
Broadcasting equipment and parts and accessories thereto and towers used or to be used by commercial radio and television companies, cable television systems, or concerns which are under the regulation and supervision of the Federal Communications Commission and amplification, transmission and distribution equipment used or to be used by cable television systems.
§ 1-88, Virginia Retail Sales and Use Tax Regulations, states, in part:
Radio and television broadcasting. Generally. The tax does not apply to broadcasting equipment (and parts and accessories to that equipment) and towers used or to be used directly in broadcasting by commercial radio and television companies or concerns which are under the regulation and supervision of the Federal Communications Commission. (Emphasis added.)
The Department has considered that the exemption provided in § 58-441.6(j) and regulated in § 1-88 applies only to broadcasting equipment and accessories to such equipment which are used directly in broadcasting. The cabinets and racks which hold the equipment are not accessories to the equipment but represent studio furniture. Accordingly, we must conclude that these items are subject to the use tax. The phone coupler is considered to be used directly in broad-casting and its value will be removed from the audit findings.
The remaining contested item is the sports ticker. § 58-441.6(a) of the Code of Virginia exempts from the sales and use tax:
Professional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made.
Based upon the information provided, the sports ticker services are not subject to the tax under the provisions of Virginia Code § 58-441.6(a). The charges for the sports ticker will be removed from the audit.
Revised assessments for both capital not otherwise taxed and use tax will be issued which reflect the adjustments as outlined above. The revised assessments should be paid with interest accruing to date.
Sincerely,
W. H. Forst
State Tax Commissioner
Re: § 58-1118 Application
Capital Not Otherwise Taxed
For the Years 1980, 1981, and 1982
Use Tax
For the Period June 1, 1978 through January 31, 1983
Dear **************
This is in reply to your letters in which you made application pursuant to § 58-1118 of the Code of Virginia for correction of State capital tax and use tax assessed against the taxpayer as captioned above.
Capital Not Otherwise Taxed
FACTS
The Department, in audit, included the value of affiliation agreements in the other taxable property category for 1980, 1981, and 1982. Taxpayer contends that the affiliation agreement represents a contract where an affiliate agrees to carry a specified amount of daily programming provided by the taxpayer. The taxpayer's operations are divided into five regions with Southwest and West regions administered by individuals located in [Texas] and [California] respectively, and the remaining regions administered from *****, Virginia. Taxpayer contends that the regional manager has full responsibility for his region and affiliation contracts. Taxpayer believes that § 58-415 of the Code of Virginia provides that the affiliation contracts controlled by the regional managers located in [Texas] and [California] obtain business situs at these branch offices and should not be subject to the Virginia tax on capital.
DETERMINATION
From the information presented, the taxpayer has substantiated that the business situs of affiliation contracts controlled by the branch offices in[Texas] and [California] are not includible in the value of Virginia capital not otherwise taxed and such contracts will be removed from the audit findings.
Use Tax
FACTS
Taxpayer is a commercial radio network. Use tax was assessed on cabinets and racks which hold equipment used for broadcasting, a phone coupler used to broadcast phone calls over the air and a sports ticker which is a wire service used to receive information which is broadcast. Taxpayer contests the assessment on the above property on the basis that the exemption under § 1-88 of the Virginia Retail Sales and Use Tax Regulations is applicable.
DETERMINATION
Virginia Code § 58-441.6(j) extends an exemption from the sales and use tax to:
Broadcasting equipment and parts and accessories thereto and towers used or to be used by commercial radio and television companies, cable television systems, or concerns which are under the regulation and supervision of the Federal Communications Commission and amplification, transmission and distribution equipment used or to be used by cable television systems.
§ 1-88, Virginia Retail Sales and Use Tax Regulations, states, in part:
Radio and television broadcasting. Generally. The tax does not apply to broadcasting equipment (and parts and accessories to that equipment) and towers used or to be used directly in broadcasting by commercial radio and television companies or concerns which are under the regulation and supervision of the Federal Communications Commission. (Emphasis added.)
The Department has considered that the exemption provided in § 58-441.6(j) and regulated in § 1-88 applies only to broadcasting equipment and accessories to such equipment which are used directly in broadcasting. The cabinets and racks which hold the equipment are not accessories to the equipment but represent studio furniture. Accordingly, we must conclude that these items are subject to the use tax. The phone coupler is considered to be used directly in broad-casting and its value will be removed from the audit findings.
The remaining contested item is the sports ticker. § 58-441.6(a) of the Code of Virginia exempts from the sales and use tax:
Professional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made.
Based upon the information provided, the sports ticker services are not subject to the tax under the provisions of Virginia Code § 58-441.6(a). The charges for the sports ticker will be removed from the audit.
Revised assessments for both capital not otherwise taxed and use tax will be issued which reflect the adjustments as outlined above. The revised assessments should be paid with interest accruing to date.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner