Tax Type
Retail Sales and Use Tax
Description
Food purchases by government
Topic
Taxability of Persons and Transactions
Date Issued
11-04-1987
November 4, 1987
Re: Ruling Request/ Sales and Use Tax
Dear ****************
This will reply to your letter of August 28, 1987 to a representative of the department's ****** District office, seeking information on the application of the sales and use tax to purchases by ******** (County), of prepared food for use at County sponsored events. We apologize for the delay in providing you with this response.
Specifically, you ask why food purchased by the County for use in feeding jail inmates qualifies for exemption from the tax, while food purchased from a caterer for a County sponsored event given in appreciation of the efforts of local volunteer fire and rescue Personnel would not qualify for exemption.
Section 58.1-608(18) of the Virginia Code provides an exemption from the sales and use tax for "[t]angible personal property for use or consumption by the Commonwealth, any political subdivision of the Commonwealth, or the United States." The term "use" is then defined in §58.1-602(20) of the Code as "the exercise of any right or power over tangible personal property incident to the ownership thereof." Virginia Regulation 630-10-45(D) provides further that "[t]he tax does not apply to sales to the Commonwealth of Virginia or to its political subdivisions, if the purchases are pursuant to required official purchase orders to be paid for out of public funds."
In addition, an opinion of the Attorney General, (OAG) dated May 14, 1970, (copy enclosed) addressed the application of the sales and use tax to charges for meals purchased by the State in connection with its hosting of the Southern Conference of the Council of State Governments in Williamsburg.
The OAG held that while the charges for the meals would have qualified for exemption from the tax if the food had been "used" by the State, no such "use" occurred where the State exercised no right or power incident to the ownership of the food. According to the OAG, "[t]he meals will be used and consumed by the guests at the conference. It is my opinion that they will be neither used nor consumed by the State unless the State exercises over the food rights and powers substantially greater than those customary in a normal banquet." The OAG concluded that the State could not use a sales tax exemption certificate when purchasing such food.
For the reasons given in the OAG the County in this case exercises no right or power over the food purchased from and prepared by a caterer, for use and consumption by guests attending a County sponsored event, whether or not the food is purchased pursuant to official purchase order and paid for out of public funds. Therefore, the County may not purchase such food exempt of the tax.
In contrast to the foregoing however, when the County, a political subdivision of the Commonwealth, purchases and takes delivery of food for the feeding of its jail inmates, it exercises a right or power incident to the ownership of the food. Therefore, the County may purchase such food exempt of the tax.
I hope that all of the foregoing has responded to your questions, but let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner