Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 210 - RETAIL SALES AND USE TAX › Section 23VAC10-210-382 - Railway common carriers; taxable status of property used in primary railway activities

Current through Register Vol. 40, No. 24, July 15, 2024
Following are descriptions and examples of taxable and
				  exempt uses of tangible personal property attributable to the four primary
				  railway activities. The listings of items for each activity are intended to be
				  representative, but not exhaustive.
1.
				Way and structures (Accounts 1-43 and 45 of the Uniform System of Accounts).
				Tangible personal property used in this activity is generally subject to the
				tax to the extent it is not an integral part of a railway's roadbed. Taxable
				property includes materials used to construct or erect most structures (station
				and office buildings, roadway buildings, sidewalks, driveways, etc.);
				structures carrying public roads; railway tunnels (except rails and roadbed);
				and items used in administrative support of the activity. Exempt items used
				directly in the rendition of common carrier service include rails; ties;
				roadbed materials; materials used to construct or erect railway bridges and
				trestles (except foundations); materials used to construct or erect piers,
				wharves and docks (except foundations); and signals. Tangible personal
				property, i.e. machinery, tools, etc., used to produce exempt tangible personal
				property such as signals, track materials, etc., is considered to be used
				indirectly in the rendition of common carrier service and is taxable.
Taxable:
Expenses and supplies of the type listed in account 1,
				  engineering, of the Uniform System of Accounts, including atlases and maps,
				  books, furniture, stationery, etc.; surveying equipment, supplies, tripods,
				  etc.;
Other supplies and equipment used in providing
				  administrative support or for the personal comfort of employees;
All material used to repair general offices, shops,
				  stations, roadway buildings, air conditioning, plumbing and heating,
				  etc.;
Materials used in the construction, repair or maintenance of
				  station and office building structures, roadway building structures, water
				  station structures, fuel station structures, shop and enginehouse structures,
				  storage warehouses, terminal building structures, dams and canals, power plant
				  building structures, and employee and other parking lots;
Materials used in the construction, repair or maintenance of
				  public improvements, including bridges and grade crossings used to carry public
				  or private roads over, under, or across railway tracks;
Materials used in the construction, repair or maintenance of
				  tunnels (except rails and roadbed);
Power plant machinery;
Telephones, switchboards, and other communications systems
				  used for administrative purposes;
Tangible personal property used in work on roads, sidewalks,
				  ditches, drains, right-of-way (other than track, roadbed, and signals), etc;
				  and
Security fences around track, railyards, etc.
Exempt:
Ties, rails and spikes;
Ballast;
Switches and switch heaters;
Track panels, frogs, turnouts, cribbing, and similar track
				  material;
Materials used to construct or erect railway bridges,
				  trestles, piers, wharves, and docks, except that materials used in the
				  foundations of such structures are taxable;
Signals and interlockers, including signals used for
				  protection at grade crossings, crossing gates, and grade crossing warning
				  bells;
Centralized traffic controls, visual and electronic train
				  monitoring and control systems;
Tangible personal property used by a railway common carrier
				  to clear and grade for roadway, and lay down roadway;
Equipment, tools, and supplies used by a railway common
				  carrier to install, maintain, and repair track, ties, roadbed, signals;
				  monitoring and control systems, and traffic control systems; however, tangible
				  personal property used in the fabrication or production of exempt tangible
				  personal property is deemed to be used indirectly in the rendition of common
				  carrier service, for instance machinery used to produce exempt signal systems
				  is taxable;
Repair and replacement parts, fuel, and supplies used to
				  repair and maintain exempt revenue equipment and equipment used to service or
				  repair exempt revenue equipment tract and communications systems; and
Coal pier and other bulk commodity loading, unloading, and
				  thawing equipment.
2.
				Equipment (Accounts 44 and 52-58 of the Uniform System of Accounts). Tangible
				personal property, other than administrative supplies, employee comfort
				supplies, and equipment and structures of all types, used in this activity is
				exempt from the tax.
Taxable:
Arm rests and cab cushions (other than for passenger
				  use);
Clocks;
Beds and bedding (other than for passenger use);
Furniture (other than for passenger use);
Kitchen equipment and supplies (other than for passenger
				  use);
Instructional cars;
Ditching cars;
Officers' cars;
Business cars;
Painters' cars;
Pay cars;
Scale test cars; and
Supplies and equipment used to maintain or repair company
				  automobiles and general purpose trucks;
Materials and supplies used for the upkeep of shop and
				  repair facilities; and computer systems used for general administrative and
				  financial accounting purposes.
Exempt:
Fire extinguishers used on revenue equipment;
Locomotives;
Freight cars;
Passenger cars;
Dynamometer cars;
Tool cars;
Ballast cars;
Rail test cars (rail test cars may be subject to the motor
				  vehicle sales and use tax, however);
Wreck cranes;
Weed burners;
Snowplow equipment used to clear track to allow for passage
				  of revenue equipment except snow removal equipment for general yard use;
Highway revenue equipment including chassis and
				  containers;
Floating equipment used for the transportation of freight or
				  passengers;
Computer systems used for guidance, monitoring or control of
				  train movements;
Tangible personal property used in the repair and
				  maintenance of revenue equipment, including wheel truing machines, electric
				  testing equipment, cranes, locomotive and car rebuilding machinery, etc.
Tangible personal property used in cleaning and painting
				  (including lettering) revenue equipment; and
Tangible personal property used in clearing wrecks.
3. Transportation. Tangible
				personal property used in this activity is generally exempt from the tax as
				this activity relates primarily to the direct operation of railways. Of course,
				administrative support activities and activities which are indirectly a part of
				rendition of common carrier service are taxable.
Taxable:
Crew meals and loading;
Tangible personal property used in supporting activities
				  such as sorting and handling waybills, reporting car movement data, etc.,
				  except equipment for communication between monitoring and control personnel and
				  revenue equipment; and
Tangible personal property used for general administrative
				  purposes or for the comfort of employees.
Exempt:
Equipment used in switching trains;
Equipment used in fueling, lubricating, maintaining, and
				  repairing revenue and service equipment;
Equipment used on revenue equipment to maintain commodities
				  (freight) at constant temperatures;
Equipment used in and for communication between monitoring
				  and control personnel and revenue equipment;
Tangible personal property used in receiving, sorting, and
				  loading freight, containers, or trailers or in adjusting or transporting loads,
				  including scales, forklifts, conveyer systems, piggybackers, racks, hand
				  trucks, packing material, straps, blocking and bracing materials, chains, and
				  waybills, freight bills or bills of lading carried with the freight being
				  transported; and
Decals and lettering used on revenue equipment.
NOTE: In the case of the way and structures, equipment, and
				  transportation activities, tangible personal property used in the servicing,
				  maintenance or repair of tangible personal property is exempt from the tax only
				  to the extent that the tangible personal property serviced, maintained or
				  repaired is exempt from the tax.
4. General and administrative. Tangible
				personal property used in the general and administrative activity is taxable.
				Such property includes office supplies, office equipment, furniture, tariff
				rate schedules, billing supplies and equipment, payroll supplies and equipment,
				etc.
Statutory Authority
§§ 58.1-203 and 58.1-609.3(3) of the Code of
					 Virginia.