Tax Type
Retail Sales and Use Tax
Description
Virginia storage of products for overseas use
Topic
Taxability of Persons and Transactions
Date Issued
07-23-1990
July 23, 1990
Re: Request for Ruling/Sales and Use Tax
Dear*****************
This will reply to your letter dated January 5, 1990 in which you request a ruling on particular transactions involving your organization.
FACTS
************** the "Taxpayer", orders merchandise from a seller outside of Virginia to be delivered to one of its missionaries who is temporarily in Virginia on furlough, to be taken overseas and used in mission work.
The Taxpayer points out that the last paragraph of subsection A of Virginia Retail Sales and Use Tax Regulation 630-10-51 provides an exemption from sales tax for the delivery of tangible personal property to a factor or agent of tangible personal property for foreign export and questions whether its employee, the missionary, could be considered its agent for export of merchandise for use overseas.
RULING
Virginia Code §58.1-608(10)(d) exempts from the sales and use tax:
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- the delivery of tangible personal property outside the Commonwealth for use or consumption outside the Commonwealth. Delivery of goods destined for foreign export to a factor or export agent shall be deemed to be delivery of goods for use or consumption outside of the Commonwealth.
- the delivery of tangible personal property outside the Commonwealth for use or consumption outside the Commonwealth. Delivery of goods destined for foreign export to a factor or export agent shall be deemed to be delivery of goods for use or consumption outside of the Commonwealth.
manufacturer; thus, the Taxpayer's missionary who exports merchandise for use overseas would not be considered such a factor or export agent.
Subsection A of VR 630-10-51 provides that a "sale in interstate or foreign commerce occurs only when title or possession to the property being sold passes to the purchaser outside of Virginia and no use of the property is made within Virginia." (emphasis added) This exemption is only intended to exempt the first "use" of such property when such use occurs outside of Virginia. This is supported by subsection B of this regulation which states:
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- ...the tax applies to the first use in Virginia of tangible personal property purchased elsewhere in a transaction which would have been taxable had it occurred in Virginia, regardless of the fact that such property may have been, or may be used in interstate commerce....
- ...the tax applies to the first use in Virginia of tangible personal property purchased elsewhere in a transaction which would have been taxable had it occurred in Virginia, regardless of the fact that such property may have been, or may be used in interstate commerce....
Under Virginia Code §58.1-602, the use tax is imposed "upon the use, consumption, distribution, and storage as herein defined." "Use" is defined as "the exercise of any right or power over tangible personal property incident to the ownership thereof...." "Storage" is defined as "any keeping or retention of tangible personal property for use, consumption or distribution in this Commonwealth, or for any purpose other than sale at retail in the regular course of business." In the instant case, the Taxpayer, by its storage in Virginia and subsequent distribution of the merchandise overseas via its missionary, is making "use" of the merchandise in Virginia.
Please note, however, that any tax paid because of first use in Virginia may be subject to credit for like taxes paid to another state.
I trust this answers your question, but should you have others, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner