Tax Type
Retail Sales and Use Tax
Description
Public corporation of the Commonwealth of Puerto Rico
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
11-30-1987
November 30, 1987
Re: Ruling Request/ Sales and Use Tax
Dear ****************
This will reply to your letter of July 24, 1987 on behalf of the*********** (taxpayer) seeking an exemption from Virginia's retail sales and use tax. We apologize for the delay in providing you with this response.
FACTS
You state that the taxpayer is a public corporation of the Commonwealth of Puerto Rico, established in 1974 for the purpose of maintaining economical maritime transportation between Puerto Rico and other countries. For example, the taxpayer is regularly engaged in the transportation of containerized freight and vehicles between ports in Puerto Rico and ports in eastern and gulf coast states of the United States and between ports in Puerto Rico and the Caribbean islands.
You contend that under Section 731 et. seq., of Title 48 of the United States Code the taxpayer has the same status as the United States government and should therefore be exempt from Virginia's sales and use tax in making purchases in the same manner as the U.S. government.
RULING
Virginia Code §658.1-608(18) 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."
Virginia Retail Sales and Use Tax Regulation 630-10-45, copy enclosed, provides further that "[t]he tax does not apply to sales to the United States if the purchases are pursuant to required official purchase orders to be paid out of public funds. The tax applies when such sales are made without the required purchase orders and are not paid for out of public funds [of the United States]." (Emphasis added)
While the taxpayer in this case may be a public corporation of the Commonwealth of Puerto Rico, and accordingly may be able to make purchases pursuant to official purchase orders, payable out of public funds of the government of Puerto Rico, it has not been shown that in making any of such purchases, that the taxpayer is able to bind the public funds of the United States.
Furthermore, I find nothing contained in any of the sections of the U.S. Code cited by the taxpayer above, which would prohibit the imposition of valid state taxes on transactions engaged in by either the Puerto Rican government itself, or public corporations of the government of Puerto Rico, such as the taxpayer, which might occur within this state.
Accordingly, I cannot agree with the taxpayer in this case that it qualifies for exemption from the sales and use tax as the equivalent of the United States government.
However, while the taxpayer does not qualify for the government exemption, there are other exemptions in Virginia's sales tax law which may provide it with some relief from the tax in making certain purchases. I have enclosed a copy of a recent ruling of the department which addresses several of these other exemptions in detail. If, after reviewing the enclosed ruling, you believe that the taxpayer qualifies for one or more of these other exemptions, you may resubmit a request for a ruling. However, any resubmitted request must be supported by a detailed statement of the facts and circumstances surrounding the transaction engaged in by the taxpayer for which the particular
exemption is sought.
I hope that the foregoing has responded to your question, but let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner