Tax Type
Retail Sales and Use Tax
Description
Simultaneous resale and lease back of equipment
Topic
Exemptions
Date Issued
09-30-1991
September 30, 1991
Re: Request for Ruling: Retail Sales and Use Tax
Dear*******************
This will reply to your letter of August 22, 1991 in which you seek clarification of a prior ruling of the department, P. D. 91-107 (6/28/91) to a particular transaction engaged in by **************(the "Taxpayer").
FACTS
The Taxpayer's customer is purchasing computer equipment which will simultaneously be resold to and leased back from the Taxpayer. The equipment vendor has already issued the original invoice to the Taxpayer's customer and will not cancel and reissue it to the Taxpayer in order to allow the Taxpayer to issue a resale exemption certificate, thereby exempting the sale from the tax.
You seek clarification as to whether the Taxpayer's customer, who is not in the business of selling computers, legally can issue a resale certificate to the original vendor, and, if not, if there is any other way to exempt the purchase from the tax so that the Taxpayer is not subject to taxation on both the original purchase and the lease.
RULING
Va. Code §58.1-623 provides that all sales or leases are subject to the retail sales and use tax until the contrary is established. The burden of proving that a sale, lease, etc., of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a valid certificate to the effect that the property is exempt. In order for a resale certificate to be valid, it must contain the registration number of the taxpayer issuing the certificate.
While your customer is not in the business of selling computers, if it is engaged in retail sales in Virginia and thus registered as a dealer with the department it may issue a resale certificate to the vendor in order to purchase the equipment exempt of the tax. However, if your customer is otherwise not required to register, it may obtain from the department a one-time authorization to purchase equipment which it intends to resell exempt from the tax. Such authorization may be obtained by submitting all relevant information to the department's Office Services Division, Technical Services Section, P. O. Box 6-L, Richmond, Virginia 23282.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner