Tax Type
Retail Sales and Use Tax
Description
Jail canteen sales
Topic
Taxability of Persons and Transactions
Date Issued
06-10-1987
June 10, 1987
Re: Ruling Request/ Sales and Use Tax
Dear *********************
This will reply to your letter of April 20, 1987 seeking information on the application of the sales and use tax to sales of personal care items sold exclusively to inmates of the ************* Jail through a jail canteen.
FACTS
According to your letter, in the past the canteen has paid the tax to its vendors at the time of purchasing the items to be resold to the inmates. However, the canteen has also added the tax to the total charge to the inmates at the time of selling these items and never reported such tax collected to the department.
Accordingly, a ruling is requested whether the canteen must be registered with the department for the purpose of collecting and reporting the tax on its sales to inmates.
RULING
Virginia Code §58.1-612 provides that the Virginia sales and use tax shall be collectible from all "dealers". The term "dealer" is defined in subsection B(3) of that section as, "every person who...[s]ells at retail, or who offers for sale at retail, ..in this State, tangible personal property..." In addition, §58.1-613 of the Code requires that, "[e]very person desiring to engage in or conduct business as a dealer in this State shall file with the Tax Commissioner an application for a certificate of registration..." §58.1-625 of the Code provides further that all sales tax collected by a dealer is "deemed to be held in trust for the Commonwealth."
Furthermore, there is no general exemption in the sales and use tax law for sales of tangible personal property to inmates.
Based on the foregoing, the canteen must become registered with the department to collect and report the sales tax on all of its retail sales to inmates. A copy of an application for a certificate of registration is enclosed and should be completed and returned to the department immediately. After becoming registered with the department the canteen may purchase exempt of the tax any of the items which it intends to resell to the inmates subject to the tax, provided it also has on file with its vendors a properly completed certificate of exemption, (Form ST-10), copies of which are enclosed.
Lastly, to the extent that the tax charged and collected by the canteen in making sales of items to inmates in the past has exceeded the amount of tax paid to its vendors at the time of purchasing such items, all such amounts must be immediately remitted to the department.
I hope that all of the foregoing has responded to your question but let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner