Tax Type
Retail Sales and Use Tax
Description
Ethy-gen sales to farmers; Nonagricultural commodity
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
07-29-1988
July 29, 1988
Re: §58.1-1821 Application/Sales and Use Tax
Dear*********************
This will reply to your letter of June 10, 1988 in which you seek the correction of sales and use tax assessed to ********** (taxpayer) as the result of a recent audit.
FACTS
The taxpayer was audited for the period October 1, 1984 through September 30, 1987 and held liable for the tax on sales of ethy-gen concentrate. The taxpayer contends that Virginia Regulation 630-10-4 provides an exemption from the tax for agricultural chemicals and agricultural supplies sold to farmers for use in agricultural production for market. In addition, the taxpayer contends that VR 630-10-5 states that the tax does not apply to any agricultural commodity sold to any person for the purpose of preparing an agricultural commodity for sale.
DETERMINATION
VR 630-10-5 defines the term agricultural commodity to mean "horticultural, poultry and farm products, and livestock and livestock products." Based upon this definition, I must conclude that the ethy-gen concentrate is not an agricultural commodity. The exemption for agricultural chemicals and agricultural supplies contained in VR 630-10-4 is specifically limited to sales to farmers. The taxpayer's customers included in the audit are wholesalers or retailers and thus do not qualify for an exemption as farmers or as industrial processors. The taxpayer should have charged the tax on the ethy-gen concentrate unless it was sold to or purchased by a farmer, or unless the taxpayer received a valid exemption certificate from its customer.
Based on the following, I do not find basis for a correction of the tax. Much as I appreciate the taxpayer's circumstances, I also do not find basis for the acceptance of the taxpayer's offer in compromise. Therefore, the assessment is due and payable in
If you have any questions regarding this determination, please do not hesitate to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner