Tax Type
Litter Tax
Description
Farmer selling fresh fruit and vegetables
Topic
Taxability of Persons and Transactions
Date Issued
07-07-1987
July 7, 1987
Re: Ruling Request
Litter Tax
Dear *********************
This is in reply to your letter of April 7, 1987 in which you request a ruling regarding the applicability of the Virginia hitter Tax to various alternative methods of operating your business.
FACTS
You operate a small farm which produces fresh fruit and vegetables for sale. The farm operates from April through November and is closed the rest of the year. Currently, you take telephone orders for the produce, package the order and deliver it to an independent retailer. The customer pays the independent retailer for the produce when they pick up their order. In the agreement between the independent retailer and the farm, the farm retains title to the produce until the customers pay for the produce.
In a previous ruling dated November 3, 1986, the department ruled that, under your current method of operating your business, you were subject to the Virginia Litter Tax.
You now question the applicability of the Virginia Litter Tax to various "direct sales" methods and to "contractual sales" methods. Furthermore, you ask the department to advise you at what point are Virginia's farmers considered not to be manufacturers, wholesalers, distributors or retailers; therefore, exempt from the Virginia Litter Tax.
RULING
The Virginia Litter Tax is imposed upon every "person" in the state who is engaged in business as a manufacturer, wholesaler, distributor or retailer of certain enumerated products. The tax is imposed at a rate of $10 per establishment from which business is conducted. An additional litter tax of $15 per establishment from which business is conducted is imposed upon every "person" who is engaged in business as a manufacturer, wholesaler, distributor or retailer of groceries, soft drinks, carbonated waters, beer and other malt beverages.
Generally, a farmer is not considered to be a "manufacturer, wholesaler, distributor or retailer"; therefore, he is not subject to the Virginia Litter Tax in any of these capacities unless he goes beyond the normal farming operations and engages in any of these activities. A farmer is subject to the Virginia Litter Tax as a "retailer" whenever he makes sales of farm products to the ultimate consumer.
"Groceries" are defined by the Virginia Litter Tax Regulations as:
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- ... all foodstuffs, beverages, meats, produce, dairy products, and household supplies, of the type sold by grocers. "Household supplies" does not include dishes, cooking utensils and reusable food containers. (Emphasis added.)
- ... all foodstuffs, beverages, meats, produce, dairy products, and household supplies, of the type sold by grocers. "Household supplies" does not include dishes, cooking utensils and reusable food containers. (Emphasis added.)
Any time that a farmer is engaged in the business of selling at retail, "... foodstuffs, ... meats, produce, dairy products, ... of the type sold by grocers", he will be subject to both the $10 litter tax and the additional $15 litter tax.
Based upon the descriptions of the direct sales alternative marketing strategies that you provide in your letter, it appears that you would still be engaged in the business of selling at retail. Accordingly, you would still be subject to both the $10 litter tax and the additional $15 litter tax. This would remain true as long as you are making sales to the ultimate consumer. To abrogate your liability for the Virginia litter tax, you must no longer make retail sales of your farm products.
While the imposition of this tax may appear to be harsh in light of farming conditions some years and when it is compared to the tax paid by larger business entities, the Code of Virginia provides no exemption from the tax for small farmers or other small businesses. If you feel that this tax imposes an inordinate hardship on small farmers such as yourself, I can only suggest that you contact one of your representatives in the Virginia General Assembly and request that correction legislation be introduced.
If you have any further questions, please do not hesitate to contact me.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner