Tax Type
Retail Sales and Use Tax
Description
Motor vehicles; Truck/tank units
Topic
Taxability of Persons and Transactions
Date Issued
10-29-1990
October 29, 1990
Re: Retail Sales & Use Tax
Dear ****
This will respond to your letter dated January 18, 1990, in which you request a ruling on the applicability of the sales and use tax to sales made by * ***** * (the "Taxpayer").
FACTS
The Taxpayer is currently involved in manufacturing truck tanks for sale to distributors and incorporation into turn-key truck/tank units for direct sale to customers along the Atlantic Seaboard. The truck chassis are purchased on a consignment basis from various truck dealers in the Midwest with the Taxpayer rarely taking ownership of the vehicle.
The Taxpayer requests a ruling on the applicability of the sales and use tax to specific activities relating to sales to Virginia customers as well as to out-of-state customers.
RULING
Va. Code §58.1-608(1)(b)provides an exemption from the retail sales and use tax for motor vehicles provided they are subject to the motor vehicle sales and use tax. All vehicles not subject to the motor vehicle sales and use tax are subject to the retail sales and use tax.
The motor vehicle sales and use tax is imposed pursuant to Va. Code § 58.1-2402on the sale of all motor vehicles in Virginia. "Motor vehicle" is defined in Va. Code §58.1-2401 as:
- "[e]very vehicle, except for mobile office . . ., which is self-propelled or designed for self-propulsion and every vehicle drawn by or designed to be drawn by a motor vehicle, including mobile homes . . . and every device in, upon and by which any person or property is, or can be, transported or drawn upon a highway, but excepting devices moved by human or animal power, devices used exclusively upon stationary rails or tracks and vehicles, other than mobile homes, used in this Commonwealth but not required to be licensed by the Commonwealth."
I will separately address below each of the transactions listed in your letter based, in part, on conversations with [the] Department of Motor Vehicles (DMV). Because the motor vehicle sales and use tax is administered by the DMV, I suggest that should you have any further questions regarding the motor vehicle sales and use tax, you contact [the DMV].
New truck/tank unit is sold to an end user, fully equipped, in a ready-to-work status.
This transaction would be subject to the motor vehicle sales and use tax when sold to a Virginia customer, and thus would be exempt from the retail sales and use tax. If sold to an out-of-state customer, it would be exempt from the motor vehicle sales and use tax pursuant to Va. Code §58.1-2403(13) which provides that motor vehicles are exempt from the tax when "[p]urchased in this Commonwealth by a nonresident and a Virginia title is issued for the sole purpose of recording a lien against the vehicle if the vehicle will be registered in a state other than Virginia." The sale of the new truck/tank unit to an out-of-state customer would also be exempt from the retail sales and use tax.
New tank and ancillary equipment are installed upon a chassis supplied by a customer.
If the chassis is already licensed with the DMV, the sale of a new tank and ancillary equipment to a Virginia customer would not be subject to the motor vehicle sales and use tax, but would be subject to the retail sales and use tax. See the enclosed copy of P.D. 85-47 (3/8/85) which addresses this issue.
In the case of a sale to an out-of-state customer, if the chassis is already licensed in the other state, the taxability of the sale of a new tank and ancillary equipment would depend on the means of delivery to the purchaser. You indicated in your letter that delivery of the unit is either performed by a professional driveway service or via customer arranged pickup.
Virginia Regulation 630-10-51 provides that the tax "[d]oes not apply to sales of tangible personal property in interstate or foreign commerce. 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."
Thus, if delivery is made by a professional driveway service hired by the Taxpayer or through other means arranged by the Taxpayer, the sale would be exempt from the retail sales and use tax. However, if the purchaser makes the arrangements for the pickup or if he picks up the vehicle himself, the retail sales and use tax would apply, unless the nonresident purchaser is required to license the chassis with the new tank and equipment in the other state.
Used tank and equipment are transferred to a new chassis, provided by the Taxpayer, for delivery to the end user.
A used tank and equipment installed on a new chassis, when sold to a Virginia customer, like the first transaction, would be subject to the motor vehicle sales and use tax and, as such, would be exempt from the retail sales and use tax. Also, like the first transaction, if sold to an out-of-state customer, it would be exempt from the motor vehicle sales and use tax and would also be exempt from the retail sales and use tax.
I hope this answers your questions, but please let me know if you need additional assistance.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner