Tax Type
Retail Sales and Use Tax
Description
Out-of-State Vendors; Drop Shipments
Topic
Taxability of Persons and Transactions
Date Issued
08-30-1991
August 30, 1991
Re: Request for Ruling: Retail Sales and Use Tax
Dear*****************
This will respond to your letter of June 11, 1991 in which you seek a ruling on the applicability of the retail sales and use tax to certain out-of-state purchases by*************(the "Taxpayer").
FACTS
The Taxpayer occasionally orders from a company in another state and drop ships the products purchased directly to another dealer in another state. It has been charged the sales tax on such purchases but points out that the merchandise never enters Virginia. The Taxpayer seeks a ruling on the correct tax treatment of this type of transaction.
RULING
I have enclosed a copy of a prior ruling letter, P.D. 89-98 (3/9/89), which addresses this type of transaction. As the letter indicates, purchases from an out-of-state company by a taxpayer located in Virginia but shipped directly to a company in another state are exempt from the Virginia sales tax since the taxpayer does not take title to or possession of the tangible personal property in Virginia or otherwise make any use of the property in the state.
In addition, if the out-of-state dealer will be reselling the goods in question, the Taxpayer may furnish its supplier with a resale exemption certificate, Form ST-10 (copy enclosed), to relieve the supplier from the collection of the tax. In such an event, the Taxpayer should also obtain a resale certificate from the out-of-state dealer for its own files.
You should note that while no Virginia sales or use tax is due on this type of transaction, the Taxpayer or the out-of-state company may be subject to a sales or use tax in the state to which the property is shipped. The Taxpayer should contact the other state for information on the applicability of the tax in that state.
If you have any further questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner