Tax Type
Retail Sales and Use Tax
Description
Wine cooperative; Barter for grapes
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
11-03-1989
November 3, 1989
Re: Request for Ruling: Sales and Use Tax
Dear*************
This will reply to your letters of June 8 and August 15, 1989, in which you wished to determine the application of the sales and use tax to certain payments.
FACTS
A wine cooperative purchases grapes from its members for processing into wine. Members receive payment for 75% of the value of the grapes thirty days after delivery, with the remaining 25% to be paid when cash flow permits. In some instances, members receive payment of the remaining 25% in wine rather than cash. You wish to determine whether members who receive payment in this manner will incur a sales and use tax liability based on the value of the wine.
RULING
The tax will not apply to the transaction described above. The initial sale of grapes to the cooperative is not subject to the tax as the grapes will be used directly in the processing of wine. The subsequent transfer of wine to the members of the cooperative is also nontaxable as this merely represents partial payment for the previous exempt sale of the grapes.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner