Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 230 - WATERCRAFT SALES AND USE TAX › Section 23VAC10-230-80 - Exemptions and exclusions

Current through Register Vol. 40, No. 24, July 15, 2024
A.
				Governments, insurance companies. The watercraft sales and use tax does not
				apply to sales to or use by the United States or any of the governmental
				agencies thereof, the Commonwealth of Virginia or any political subdivision
				thereof, or sold to an insurance company for the sole purpose of disposition
				when such insurance company has paid the registered owner of the watercraft on
				a total loss claim, nor does the tax apply to ships or vessels used or to be
				used exclusively in interstate or foreign commerce.
For sales to the United States, the Commonwealth of Virginia
				  or any political subdivision to be exempt from the tax, the purchases must be
				  pursuant to required official purchase orders to be paid for out of public
				  funds. Sales to governmental employees for their own use are taxable. If
				  pursuant to an official purchase order, the tax will not apply to sales to or
				  use by officers' clubs, noncommissioned officers' clubs, officers' messes,
				  noncommissioned officers' messes, and post exchanges organized, operated and
				  controlled under Department of Defense regulations. The exemption does not
				  cover individuals or organizations operating on a military reservation in their
				  own right. No person is relieved from liability for payment of, collection of,
				  or accounting for the tax on the ground that the sale or use occurred in whole
				  or in part within a federal area.
In the first sentence of this section, the phrase "use by"
				  relates to the exempt use in the Commonwealth of any watercraft purchased
				  without this state by a governmental agency as set out above. It has no
				  application in cases where the renter, lessee, or other user is a governmental
				  agency.
B. Commercial
				watermen. Any watercraft constructed by a commercial waterman for his own use
				in extracting fish, bivalves or crustaceans from waters for commercial purposes
				is exempt from the Watercraft Sales and Use Tax so long as such watercraft is
				used solely and exclusively for such purposes. If such watercraft is used
				primarily for exempt purposes but also for nonexempt purposes, it will be
				subject to tax on a pro rata portion of its value based on the percentage of
				non-exempt use; if not used primarily for exempt purposes, its entire value
				will be subject to tax. For purposes of this subsection the term "used
				primarily" means used more than 50% for exempt purposes.
C. United States Coast Guard marine
				documentation. Vessels with valid marine documentation do not meet the
				definition of "watercraft" (see
				23VAC10-230-30 ). Marine
				documentation is issued by the United States Coast Guard to the owner(s) of
				vessels as evidence of ownership in such vessels. Valid documentation becomes
				void upon sale and must be reinstated in the name(s) of the purchaser(s).
				Therefore, for purposes of this chapter, no watercraft will be considered to
				have a valid marine document when purchased either new or used.
D. See § 58.1-1404 of the Code of
				Virginia for additional exemptions.
E. The exemptions of this section do not
				apply with respect to rentals, leases or charters in the case of a dealer who
				pays a gross receipts tax under the dealer exclusion, as the gross receipts tax
				is levied on the dealer and not upon the renter, lessee, or other
				user.
Statutory Authority
§ 58.1-203 of the Code of Virginia.