Tax Type
Retail Sales and Use Tax
Description
Computer lease transaction.
Topic
Exemptions
Date Issued
04-30-1985
April 30, 1985
Dear ****
This will reply to your letter of January 3, 1985, in which you submit a request for a ruling on the applicability of the sales and use tax to a computer lease transaction.
As you relate to your letter, * * * only business activity in Virginia involves the lease of computer equipment to a single customer. This customer in turn subleases the computer equipment to other persons and collects the sales tax on such subleases. Your client wishes to determine whether its purchase of the computer equipment and its subsequent lease of such equipment will be exempt from the sales and use tax as sales for resale and whether it will need to register as a dealer to collect the tax.
Based upon the above information, your client's computer equipment in Virginia is exempt from the tax provided that such equipment is held for leasing to customers and is not used by your client in any other manner. In addition, the lease from your client to its customer would not be subject to the sales and use tax as its customer will be re-leasing the computer equipment and that transaction will be taxed.
§ 58.1-612.B.5 of the Code of Virginia provides that the sales tax is collectible by dealers, including every person who "[l]eases or rents tangible personal property for a consideration, permitting the use or possession of such property without transferring title thereto.' While your client might be required to register as a dealer under the above statute and Virginia Code § 58.1-613, I find basis in this instance for not requiring such registration as * * * is making no taxable sales based upon the information you have provided.
In order to make tax-exempt purchases for resale in Virginia, your client should provide its vendors with a resale exemption certificate, Form ST-10. If a vendor does not honor such a certificate from your client, he may be provided with a copy of this letter. In addition, your client's customers must provide such certificate in order to lease tangible personal property exclusive of the tax.
Dear ****
This will reply to your letter of January 3, 1985, in which you submit a request for a ruling on the applicability of the sales and use tax to a computer lease transaction.
As you relate to your letter, * * * only business activity in Virginia involves the lease of computer equipment to a single customer. This customer in turn subleases the computer equipment to other persons and collects the sales tax on such subleases. Your client wishes to determine whether its purchase of the computer equipment and its subsequent lease of such equipment will be exempt from the sales and use tax as sales for resale and whether it will need to register as a dealer to collect the tax.
Based upon the above information, your client's computer equipment in Virginia is exempt from the tax provided that such equipment is held for leasing to customers and is not used by your client in any other manner. In addition, the lease from your client to its customer would not be subject to the sales and use tax as its customer will be re-leasing the computer equipment and that transaction will be taxed.
§ 58.1-612.B.5 of the Code of Virginia provides that the sales tax is collectible by dealers, including every person who "[l]eases or rents tangible personal property for a consideration, permitting the use or possession of such property without transferring title thereto.' While your client might be required to register as a dealer under the above statute and Virginia Code § 58.1-613, I find basis in this instance for not requiring such registration as * * * is making no taxable sales based upon the information you have provided.
In order to make tax-exempt purchases for resale in Virginia, your client should provide its vendors with a resale exemption certificate, Form ST-10. If a vendor does not honor such a certificate from your client, he may be provided with a copy of this letter. In addition, your client's customers must provide such certificate in order to lease tangible personal property exclusive of the tax.
Rulings of the Tax Commissioner