Tax Type
Retail Sales and Use Tax
Description
Precious metal purchased for investment purposes
Topic
Taxability of Persons and Transactions
Date Issued
08-26-1987
August 26, 1987
Re: Ruling Request
Retail Sales and Use Tax
Dear *****************
This is in reply to your letter of April 24, 1987 in which you request a ruling regarding the applicability of Virginia Retail Sales and Use Tax to certain transactions in which your company acts as agent in the sale of precious metals.
FACTS
************* (Company A) is an investment brokerage firm. In order to meet the investment needs of its customers, Company A has chosen to work with (Company B), which offers a precious metals purchase program. Company B, which has no offices within Virginia, offers Company A's customers two methods of purchasing precious metals for investment purposes under its precious metals purchase program.
Under the first method, Company A, upon receipt of purchase instructions from its customer, would transmit the purchase order to Company B. Company B then purchases actual bullion or coins on the New York Commodities Exchange and arranges for the delivery to Company A's Virginia customer.
Under the second method, Company A, upon receipt of purchase instructions from its customer, would transmit the purchase order for a precious metals certificate to Company B. Company B then purchases actual bullion or coins on the New York Commodities exchange and arranges for their delivery to the Bank of Delaware. An independent authorizing agent verifies that the bullion has been purchased and deposited with the Bank of Delaware. The independent authorizing agent, upon receipt of an executed account agreement, issues certificates representing the amount of bullion purchased. The Virginia customer never takes delivery of the precious metal. The records of the Virginia customer's purchase are not maintained by Company A. The customer receives semiannual statements from Company B. Company A's sole role is on an agency basis in the initial purchase of the precious metals certificate, but not the actual precious metal.
You request a ruling regarding the applicability of the Virginia Retail Sales and Use Tax to the transactions under the second method as set forth above.
RULING
The Virginia Retail Sales and Use Tax Act imposes the sales tax under Virginia Code §58.1-603 upon
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- every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth, or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or consumption in this Commonwealth any item or article of tangible personal property as defined in this chapter, or who leases or rents such property within this Commonwealth, in the amount of three and one-half percent ... (Emphasis added.)
- every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth, or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or consumption in this Commonwealth any item or article of tangible personal property as defined in this chapter, or who leases or rents such property within this Commonwealth, in the amount of three and one-half percent ... (Emphasis added.)
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- the cost price of each item or article of tangible personal property used or consumed in this Commonwealth. Tangible personal property which has been acquired for use outside this Commonwealth and subsequently becomes subject to the tax imposed hereunder shall be taxed on the basis of its cost price if such property is brought within this Commonwealth for use within six months of its acquisition; but if so brought within this Commonwealth six months or more after its acquisition, such property shall be taxed on the basis of the current market value (but not in excess of its cost price) of such property at the time of its first use within this Commonwealth. Such tax shall be based on such proportion of the cost price or current market value as the duration of time of use within this Commonwealth bears to the total useful life of such property (but it shall be presumed in all cases that such property will remain within this Commonwealth for the remainder of its useful life unless convincing evidence is provided to the contrary).
- the cost price of each item or article of tangible personal property used or consumed in this Commonwealth. Tangible personal property which has been acquired for use outside this Commonwealth and subsequently becomes subject to the tax imposed hereunder shall be taxed on the basis of its cost price if such property is brought within this Commonwealth for use within six months of its acquisition; but if so brought within this Commonwealth six months or more after its acquisition, such property shall be taxed on the basis of the current market value (but not in excess of its cost price) of such property at the time of its first use within this Commonwealth. Such tax shall be based on such proportion of the cost price or current market value as the duration of time of use within this Commonwealth bears to the total useful life of such property (but it shall be presumed in all cases that such property will remain within this Commonwealth for the remainder of its useful life unless convincing evidence is provided to the contrary).
If you have any further questions, please do not hesitate to contact me.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner