Tax Type
Retail Sales and Use Tax
Description
Auction sales
Topic
Taxability of Persons and Transactions
Date Issued
10-24-1988
October 24, 1988
Dear**************************
This will reply to your letter of October 6, 1988, in which you request a ruling on the application of the sales tax to goods sold at auctions.
FACTS
Your business will be conducting three auctions within Virginia. The first will be a one-day sale involving 90% of the assets of a construction company, which will remain in operation after the sale. The second will be a one-day sale of the entire assets of a construction company, which will cease business after the sale. The final auction will involve several consignors, some of whom may be liquidating their business assets.
Based upon these facts, you wish to determine the applicability of the "occasional sale" exemption to the goods sold at these auctions.
RULING
Virginia Regulation 630-10-9 (copy enclosed) provides:
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- an auctioneer ... cannot make an "occasional sale" of tangible personal property because his business is the sporadic and occasional sale of property. Therefore, an auctioneer must collect the tax on all sales including estate sales and similar sales of short duration.
- an auctioneer ... cannot make an "occasional sale" of tangible personal property because his business is the sporadic and occasional sale of property. Therefore, an auctioneer must collect the tax on all sales including estate sales and similar sales of short duration.
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- An auctioneer ... who sells substantially all the assets of a liquidating or reorganizing business as required in §630-10-75 is deemed to be engaged in an occasional sale and is not liable for collection or payment of the tax provided the sale occurs in 3 days or less.
Based upon this regulation, the tax will apply to your business as follows:
- While the first auction will last one day and represent the sale of 90% of the assets of a business, the business in question will remain in operation. As such, the auction is not pursuant to the "reorganization or liquidation" of a business as required under Virginia Regulation 630-10-75 (copy enclosed) and collection of the tax will be required.
- The second auction will last one day and represent the sale of all of the assets of a business, which will not continue in operation after the sale. Based on these facts, the exception set forth in subsection (B)(2) of VR 630-10-9 applies and collection of the tax will not be required.
- The final auction will consist of several consignors and last for one day. While it is possible that some of the consignors may liquidate their business assets, the auction as a whole will not represent the sale of substantially all the assets of a liquidating or reorganizing business. As such, collection of the tax will be required on all tangible personal property sold at the auction.
I trust that this will answer all of your questions, but please do not hesitate to contact the department if further questions arise.
Sincerely.
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner