Tax Type
Retail Sales and Use Tax
Description
Leases and rentals; Personal property taxes
Topic
Taxability of Persons and Transactions
Date Issued
03-08-1989
March 8, 1989
Re: Ruling Request/ Sales and Use Tax
Dear*****************
This will reply to your letter of December 6, 1988 seeking a ruling on the application of the sales and use tax to personal property taxes passed or to lessees by lessors of tangible personal property.
Virginia Code §58.1-603(2) imposes the sales tax on "the gross proceeds derived from the lease or rental of tangible personal property." "Gross proceeds" is defined in Virginia Code §58.1-602(4) as, "the charges made or voluntary contributions received for the lease or rental of tangible personal property or for furnishing services." (Emphasis added). Therefore, the total amount received by a lessor for the lease of tangible personal property, including any amount not included in the base lease amount, is generally subject to the sales tax.
However, certain charges are deductible from gross proceeds under the provisions of Virginia Code §58.1-602(17):
-
- [The] amount separately charged for labor or services rendered in installing, applying, or remodeling or repairing property sold, finance charges, carrying charges, service charges or interest from credit extended on sales of tangible personal property under conditional sale contracts or other conditional contracts providing for deferred payments of the purchase price, or transportation charges separately stated.
- [The] amount separately charged for labor or services rendered in installing, applying, or remodeling or repairing property sold, finance charges, carrying charges, service charges or interest from credit extended on sales of tangible personal property under conditional sale contracts or other conditional contracts providing for deferred payments of the purchase price, or transportation charges separately stated.
Therefore, I find no basis in Virginia law for the deduction from gross proceeds that you have requested for personal property tax paid on leased equipment.
Please let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner