SALT Report 1769 – The Virginia Tax Commissioner issued a private letter ruling regarding a Taxpayer’s lease of a high speed electrostatic duplicator for use in its full-service printing/copy center. In the past, printers were classified as industrial manufacturers and were eligible to purchase photocopiers exempt from tax under the industrial manufacturing exemption. However, reproducing originals for sale as part of a retail business is classified as a nonindustrial service activity.
In 1986, the Virginia General Assembly allowed an exemption under Va. Code § 58.1-609.3 11 for “high speed electronic duplicators or any other duplicators which have a printing capacity of 4,000 impressions or more per hour purchased or leased by persons engaged primarily in the printing or photocopying of products for sale or resale.” The exemption was enacted to allow photocopy businesses to purchase high speed copy machines exempt from tax when used in a nonindustrial manner.
The Taxpayer in this case did not qualify for the either exemption for the following reasons:
- The taxpayer was not an industrial manufacturer, and
- An auditor review of the Taxpayer’s business operations showed that the printer did not print the 4,000 or more impressions per hour necessary to qualify
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