Tax Type
Retail Sales and Use Tax
Description
Interstate transactions; Goods delivered in-state at request of purchaser
Topic
Taxability of Persons and Transactions
Date Issued
04-24-1996
April 24, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear*************
This will reply to your letter of August 7, 1995 in which you seek correction of the sales and use tax audit of***** (the "Taxpayer") for the period of June 1992 through March 1995.
FACTS
The Taxpayer is a specialty company located in Virginia that produces promotional items for resale. The Taxpayer sold items to a Washington, D.C. customer (the "Customer") for ultimate use in the State of New Jersey. At the Customer's direction, the Taxpayer delivered the items to a printing company in Alexandria, Virginia. The Taxpayer is of the opinion that since the final destination of the items was New Jersey, the sale qualifies as a sale in interstate commerce exempt from tax. The Taxpayer is requesting that these sales be removed from the audit sample.
DETERMINATION
Virginia Regulation (VR) 630-10-51, copy enclosed, addresses sales in interstate and foreign commerce and states, in part, the following:
-
- The tax does 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.
In order for the sales in question to qualify for the interstate commerce exemption, delivery of the property must be made to the Customer (purchaser) outside the State of Virginia. As understood by this office, the items in question were delivered to a printer located in Virginia at the Customer's request. While the Customer did not take actual possession of the property, the Customer is deemed to take constructive possession of the property in Virginia when it directs the property to be delivered to another party, thus rendering the transaction taxable for Virginia tax purposes. Based on the strict construction of the interstate and foreign commerce exemption, there is no basis for exempting the items in question as interstate commerce. The department's position is further substantiated by the Tax Commissioner's ruling found in P.D. 93-217, copy enclosed.
It is noted in your letter that the tangible personal property at issue was purchased by the Customer for resale. If the Taxpayer can provide documentation showing that the items were for resale, I will agree to remove these items from the audit sample and adjust the audit accordingly.
If you should have any questions, please contact *********, Office of Tax Policy, at*********.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner