Tax Type
Retail Sales and Use Tax
Description
Gift sales for delivery to third party outside Virginia
Topic
Taxability of Persons and Transactions
Date Issued
03-20-1990
March 20, 1990
Re: Request for Ruling/Sales and Use Tax
Dear ****
This will reply to your letter of January 29, 1990 in which you are requesting a ruling as to the sales and use tax application to gift sales for delivery outside the state of Virginia.
Your letter indicates that there is some confusion among Virginia retail merchants as to the sales tax application to third party gift transactions when delivery of gift is to an out-of-state recipient. The department's position on this issue remains unchanged since my May 27, 1988 letter to you, notwithstanding the Virginia Supreme Court's decision not to hear the department's appeal of Hennage Creative Printers v. Commonwealth. As such, delivery must be to the purchaser outside of Virginia in order for a gift transaction to be exempt.
The Alexandria Circuit Court's opinion in Hennage was based on pre-1985 law and regulations. The court specifically stated in this regard that:
-
- [T]he State's position... seeks to have this Court impose a requirement that delivery must be to the buyer outside the Commonwealth before the statutory and regulatory exemption will apply. No such requirement exists other in the Virginia statute or in the State's own... Regulations. It would not be proper for the Court to re-write the statute or the regulation.
- [T]he State's position... seeks to have this Court impose a requirement that delivery must be to the buyer outside the Commonwealth before the statutory and regulatory exemption will apply. No such requirement exists other in the Virginia statute or in the State's own... Regulations. It would not be proper for the Court to re-write the statute or the regulation.
Virginia Regulation 630-10-44.1 (copy enclosed) continues to set forth the department's longstanding policy on gifts. In a three-party gift transaction where an out-of-state purchaser phones an order to an instate vendor for delivery to an out-of-state recipient, the department has consistently taken the position that the out-of-state purchaser takes constructive possession of the gift at the time of order, thus making the transaction subject to Virginia tax. Likewise, the same would hold true if an instate purchaser places an order by phone, or in person, for delivery outside the state.
If you should have any further questions, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner