Tax Type
Retail Sales and Use Tax
Taxes of Other Agencies
Description
Trailers leased to construction companies
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
06-02-1987
June 2, 1987
Re: Ruling Request / Trailer Leasing
Retail Sales and Use Tax
Dear ***********************
This is in reply to your letter of October 21. 1986 in which you request a ruling regarding the application of the Virginia Retail Sales and Use Tax to the leasing of certain trailers to construction companies.
FACTS
These trailers are owned by a company in the business of operating trucks and trailers on the highway. As an unrelated activity, the company from time to time leases trailers to construction companies, who transport the trailers to construction sites where they are used for storage of materials and equipment. The trailers may or may not be licensed for use on the highways, but during the period for which they are leased, are not used on the highways. The leases are generally for the length of time the construction project is underway, which may or may not be longer than-twelve months.
RULING
The Code of Virginia provides for both a Retail Sales and Use Tax, administered by the Department of Taxation and a Motor Vehicle Sales and Use Tax, administered by the Department of Motor Vehicles. In order that the same transaction is not subjected to both taxes, Virginia Code §58.1-608. 7. provides that the Virginia Retail Sales and Use Tax shall not apply to, "[m]otor vehicles, trailers and semitrailers, mobile homes and travel trailers."
Under the Motor Vehicle Sales and Use Tax, Virginia Code §58.1-2402 provides that, "[t]here shall also be levied a tax upon the rental of a motor vehicle in Virginia, without regard to whether such vehicle is required to be licensed by the Commonwealth. However, such tax shall not be levied upon a rental to a person for re-rental as an established business or part of an established business, or incidental or germane to such business." Since the definition of "Motor Vehicle" under Virginia Code §58.1-2401 includes, "... every vehicle drawn or designed to be drawn by a motor vehicle ...", it appears that the rental transactions that you describe are subject to the four percent Motor Vehicle Sales and Use Tax administered by the Department of Motor Vehicles rather than the four and one-half percent Retail Sales and Use Tax administered by the Department of Taxation.
Since the tax on the above transaction is administered by the Department of Motor Vehicles, I suggest that you contact them if you desire more information regarding the application of this tax.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner