Tax Type
Retail Sales and Use Tax
Description
Membership materials; Consumer use tax
Topic
Taxability of Persons and Transactions
Date Issued
02-27-1987
February 27, 1987
Re: Virginia Code §58.1-1821 Application
Retail Sales and Use Tax
Dear ******************
This is in reply to your letter of June 9, 1986 in which you request reconsideration of the department's determination of April 29, 1986 on behalf of your client, *************** (Taxpayer).
You are basing your request for reconsideration upon the contention that the department's determination letter of April 29, 1986 appears to be inconsistent with the decision of the Supreme Court of Virginia in the matter of Commonwealth of Virginia, Department of Taxation v. Miller-Morton Company, 220 Va. 852, 263 S. E. 2d 413 (1980). In support of your contention, you cite the following from the above mentioned case:
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- In view of this holding, we must distinguish between the samples distributed in the Richmond region and those distributed in the other three regions. These latter products were shipped as inventory from Richmond to warehouses outside Virginia. There, the products retained the "for resale" status until removed from inventory. While in Virginia, these products were never Purchased or stored for a purpose other than resale. Consequently, they were not subject to Virginia sales and use taxes. (Emphasis added.)
- In view of this holding, we must distinguish between the samples distributed in the Richmond region and those distributed in the other three regions. These latter products were shipped as inventory from Richmond to warehouses outside Virginia. There, the products retained the "for resale" status until removed from inventory. While in Virginia, these products were never Purchased or stored for a purpose other than resale. Consequently, they were not subject to Virginia sales and use taxes. (Emphasis added.)
As a rule, individuals are motivated to join organizations because they wish to show their support for the goals of the organization and for the rights and privileges associated with membership in the organization, not because they want to obtain a membership pin, card or plaque. Generally, these items are of little or no importance when an individual decides to join an organization.
The department recognizes that a part of a member's dues are used to offset the cost of these items; however, unless the part of the dues that was used to offset the cost of these items was indicated in the membership agreement, the department finds that such tangible personal property purchased by the Taxpayer was not sold to the new members. Because such property was not sold, but instead it was given to the new members coincidental to their membership, it is not inventory held for resale.
Absent evidence that such purchases were actually sold to the new members, I find no basis upon which to reverse my determination of April 29, 1986.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner