23 Va. Admin. Code § 10-210-280 - Certificates of exemption
A.
Generally. All sales, leases and rentals of tangible personal property are
subject to the tax until the contrary is established. The burden of proving
that the tax does not apply rests with the dealer unless he takes, in good
faith from the purchaser or lessee, a certificate of exemption indicating that
the property is exempt under the law. The certificate will remain in effect
except upon notice from the Department of Taxation that it is no longer
acceptable. However, a certificate that is incomplete, invalid, infirm or
inconsistent on its face is never acceptable, either before or after notice.
Certificates of exemption in the various categories will be furnished to dealers on request. Each certificate explains its use, and it may be reproduced by the dealer for use on purchase orders, sales slips or other documents relating to the transaction. (See subsection E of this section for an exception).
B. Legitimate
use of exemption certificates is vital. Reasonable care and judgment must be
exercised by all concerned to prevent the giving or receiving of false,
fraudulent or bad faith exemption certificates. An exemption certificate cannot
be used to make a tax free purchase of any item of tangible personal property
not covered by the exact wording of the certificate.
C. Illustrations of the misuse of exemption
certificates.
1. Purchases under Form ST-10
(resale exemption certificate) by a registered dealer, who is operating a
grocery store, for example, of items such as adding machines, typewriters, cash
registers, or showcases for use in the business. Such items are subject to the
tax. No exemption certificate offered in making such a purchase is
acceptable.
2. Purchases under Form
ST-10 (resale exemption certificate) by a registered automobile dealer, garage
or service station operator, of items such as jacks or hand tools for use in
the business. Such items are subject to the tax. No exemption certificate
offered in making such a purchase is acceptable.
3. Purchases under Form ST-10 (resale
exemption certificate) by a registered operator of a hotel, motel, inn or
restaurant, of items such as furniture or fixtures; fuel oil, coal or bottled
gas for heating or cooking; linens, refrigerators or stoves, for use in the
business. Such items are subject to the tax. No exemption certificate offered
in making such a purchase is acceptable.
4. Purchases under Form ST-11 (manufacturers
exemption certificate) by the operator of a manufacturing, processing or mining
business of items such as tires, batteries or repair parts for delivery
equipment; tools for use in repairing machinery; office furniture or office
machines; or office supplies. Such items are not used directly in
manufacturing, mining, processing, refining or converting products for sale or
resale and are subject to the tax. No exemption certificate offered in making
such a purchase is acceptable.
5.
Purchases under Form ST-18 (agricultural exemption certificate) of items such
as tires, batteries or repair parts for off-the-farm vehicles; feed for pets;
feed for riding or pleasure horses; or household equipment or supplies. Such
items are not for use in agricultural production for market and are subject to
the tax. No exemption certificate offered in making such a purchase is
acceptable. A person who calls himself a "farmer" but who is not engaged in the
business of producing agricultural products for market is not entitled to claim
any agricultural exemption. No exemption certificate offered by him in making a
purchase is acceptable.
D. Taxable use of property after tax-exempt
purchase makes property subject to sales tax. If a purchaser or lessee who
gives an exemption certificate makes any use of the property other than an
exempt use or retention, demonstration or display while holding property for
resale, distribution or lease in the regular course of business, the use is
treated as a taxable sale by the purchaser or lessee at the time the property
is first used by him. The cost of the property to him is the sales price of
such retail sale. If the sole use of the property other than retention,
demonstration or display in the regular course of business is the rental of the
property while holding it for sale, distribution or lease, the purchaser may
elect to pay the tax on the amount of the rental charged, rather than the cost
of the property to him. For example, a grocer may purchase lollipops tax exempt
under the resale exemption but subsequently elect to give some of these away to
children on Halloween. Because the items were purchased tax exempt and used by
the grocer rather than sold, he is liable for accruing and remitting use tax
based upon the cost price of the lollipops. The same principle is applicable to
items donated to charitable organizations, civic groups, etc. and to free
product samples distributed by manufacturers or wholesalers.
E. Exemption certificates issued only by
department. As noted in subsection A of this section, exemption certificates
are generally available on request from the department. However, persons
seeking exemption for property to be used in a certified pollution control
project (see
23VAC10-210-2090 ) or contractors
purchasing exempt manufacturing or processing equipment or construction
materials for use in an exempt project outside of Virginia which are
temporarily stored in Virginia (see
23VAC10-210-410 and
23VAC10-210-920 ) must apply in
writing to the department for the issuance of an exemption certificate, Form
ST-11A. The request for the certificate must include a description of the
project, the items being purchased and, if applicable, the owner of the
project. Upon receipt of this information, the department will issue exemption
certificates.
Notes
Statutory Authority
§§ 58.1-203 and 58.1-623 of the Code of Virginia.
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.