Tax Type
Retail Sales and Use Tax
Description
Computer Software and Equipment; Price Updates Stored on Tapes or Diskettes
Topic
Taxability of Persons and Transactions
Date Issued
09-06-1991
September 6, 1991
Re: §58.1-1821 Application: Retail Sales & Use Tax
Dear******************
This will reply to your letter of November 29, 1988 seeking reconsideration of my January 4, 1988 determination to*************(the "Taxpayer") in the above referenced case. We regret the delay in providing you with this response.
FACTS
The Taxpayer contends that the department's determination (P.D. 88-20, 1/4/88) is in error with regard to the Taxpayer's sale of parts price updates which are provided to clients on magnetic media (tapes/diskettes, etc.). The Taxpayer maintains that the provision of parts price updates is similar to the provision of mailing lists which the department has previously held to qualify for exemption from the tax. In addition, the Taxpayer states that the sale of parts price information is identical to the sale of current on-line stock market quotation information which the department has previously held to be exempt from sales tax. Finally, the Taxpayer contends that the "true object" of its sales of parts price updates is the provision of an information service, and that any tangible personal property conveyed is not critical to the transaction.
DETERMINATION
I will address each of your contentions separately below:
Similarity of price updates to mailing lists: The only mailing lists which the department has exempted from the sales tax have been custom lists prepared for a specific client. Standardized mailing lists have always been subject to the tax. Thus, the exemption for custom mailing lists does not support an exemption for the non-custom parts price updates held taxable in this case.
Similarity of information to on-line stock Quotation information: The information provided in the referenced case was fed electronically via wires to brokers who contracted for certain stock quotation systems, while the parts updates which form the basis of this protest were not provided to the Taxpayer's clients electronically, but through tangible tapes/diskettes. Thus, the modes through which the information was conveyed to clients in these two cases are demonstrably different.
"True object" of the transaction: For the reasons given in my January 4, 1988 determination, I cannot agree that the tapes/disks conveyed by the Taxpayer to its clients are not critical to the transaction. The parts price information would be unusable by many of the Taxpayer's clients but for the tapes/diskettes themselves.
Based on the foregoing, I continue to find no basis for correction of the assessment which is now due and payable. You will shortly receive a bill with interest accrued through the date of the Taxpayer's November 29, 1988 which should be paid within 30 days to avoid the accrual of additional interest.
Please note, however, that when the issue addressed in this letter comes up for review as part of the department's periodic regulation review process, we will take your comments into consideration.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner