Tax Type
Retail Sales and Use Tax
Description
Pagers; Inventory pool in Virginia
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
05-11-1989
May 11, 1989
Re: Request for Ruling: Sales and Use Tax
Dear***************
This will reply to your letter dated February 6, 1989 in which you request a ruling on the applicability of sales and use tax to paging devices leased/rented by
FACTS
**********("The Taxpayer") provides paging services in Maryland, District of Columbia, and Virginia. The Taxpayer's main office and inventory of paging devices are located in ********** Maryland and the District of Columbia allow paging companies to purchase pagers exempt of the sales tax under a resale exemption certificate if the pagers are for resale (i.e. outright sale, lease or rental). However, in Virginia these companies are deemed the consumers of the pagers and any other property used in providing the paging service and must pay the tax on the purchase of such property.
The Taxpayer does not maintain a separate inventory pool of pagers for each state. Thus, it is difficult for the Taxpayer to determine at the time of initial purchase which pagers will be leased or rented in Maryland and the District of Columbia where they may be purchased exempt of the sales tax or Virginia where the sales tax is due at the time of purchase. Therefore, the Taxpayer requests permission to: 1) purchase the paging devices exempt of sales tax; 2) charge sales tax to its customers on the monthly lease or rental charge in the same manner as an outright sale; and 3) collect the sales tax from its customers and remit the tax to the Commonwealth of Virginia on a monthly basis.
RULING
Based on Virginia Retail Sales and Use Tax Regulation §630-10-109, copy enclosed, the Taxpayer must remit the use tax on any pagers leased or rented in Virginia in connection with providing paging services if the applicable sales or use tax was not paid at the time of purchase. In addition, the Taxpayer must collect sales tax on any pagers sold to Virginia customers and any pagers leased or rented independent of the provision of paging services.
Because the Taxpayer does not know at the time of purchase which pagers will be used in Virginia, it may continue to make all purchases exempt from the tax using resale exemption certificates. However, when pagers are withdrawn from resale inventory for use in Virginia, the Taxpayer must remit the applicable Virginia use tax.
I have enclosed a registration application for consumer use tax and copies of the consumer use tax return, Form ST-7.
Should you have any additional questions regarding this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner