Tax Type
Retail Sales and Use Tax
Description
Bus operation
Topic
Taxability of Persons and Transactions
Date Issued
02-13-1987
February 13, 1987
Re: Ruling Request/ Sales and Use Tax
Dear******************
This will reply to your letter of October 9, 1986 seeking an exemption from Virginia's retail sales and use tax for certain purchases made by***************** (taxpayer), under §58.1-608(10) of the Virginia Code.
FACTS
In connection with its bus service and repair business, taxpayer operates a number of school buses to transport students to and from school and on school sponsored trips. Taxpayer seeks exemption from the tax on its purchases of tangible personal property, i.e., repair parts, for use on its buses.
In support of its request for exemption, taxpayer states that its bus purchases are already exempt from the Motor Vehicle Sales and Use Tax under §58.1-2403(12) of the Code, (formerly, §58-685.13(12)), for certain urban and suburban bus lines having seats for more than seven passengers. In addition, taxpayer states that in connection with its bus operation it has filed for and has been assured that it will obtain exemption from certain federal excise taxes under §4221(d)(7) of the Internal Revenue Code for "qualified buses".
Lastly, while taxpayer is aware of the provisions of §630-10-24.3 of Virginia's Retail Sales and Use Tax Regulations governing common and contract carriers it claims that such provision should not preclude the granting of an exemption in this case since it is not subject to the jurisdiction of or regulation by the State Corporation Commission.
RULING
§58.1-608(10) of the Virginia Code provides that the tax does not apply to:
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- Tangible personal property sold or leased to a public service corporation subject to a state franchise or license tax upon gross receipts, for use or consumption by such corporation directly in the rendition of its public service, and tangible personal property sold or leased to a public service corporation engaged in business as a common carrier of property or passengers by motor vehicle or railway, for use or consumption by such common carrier directly in the rendition of its public service.
- Tangible personal property sold or leased to a public service corporation subject to a state franchise or license tax upon gross receipts, for use or consumption by such corporation directly in the rendition of its public service, and tangible personal property sold or leased to a public service corporation engaged in business as a common carrier of property or passengers by motor vehicle or railway, for use or consumption by such common carrier directly in the rendition of its public service.
Therefore, only tangible personal property purchased for use in a common carrier operation, as defined by the bounds of such a carriers ICC or SCC authority, qualifies for this exemption from the tax. Accordingly, since taxpayer in this case has indicated that its bus service is not a common carrier operation subject to regulation by the SCC or ICC, I find no basis in Virginia law for extending this exemption to taxpayer's purchases of tangible personal property for use in such operation.
Furthermore, there is no general exemption in the retail sales and use tax law similar to the one granted in the motor vehicle sales and use tax law for certain urban and suburban bus lines. Lastly, even if taxpayer's bus operation qualifies for the federal excise tax exemptions referenced in its letter, taxpayer has not cited any section of the Internal Revenue Code which would preclude the application of a retail sales and use tax to its purchases of tangible personal property for use in such bus operation.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner