Were corn, wheat, barley, and rye exempt from Virginia sales tax when individuals bought the grain to burn as home-heating fuel?

Subject

The fuels exemption does not apply to the Taxpayer's sale of corn for home fuel

Plain-English summary

Virginia ruled that corn, wheat, barley, and rye remained taxable when customers bought them to burn as fuel in home-heating stoves. Their use as fuel did not place them within the domestic-fuel exemption.

The statute specifically listed artificial or propane gas, firewood, coal, and home heating oil used for domestic consumption. Because tax exemptions were strictly construed, the Department would not extend that list to grain.

An earlier ruling exempting pellets did not help because those pellets were derived from wood, an expressly listed fuel. The ruling also described a separate temporary exemption for qualifying multifuel heating stoves, but emphasized that the exemption covered the stove and not corn or other alternative fuels burned in it.

What this means for you

• A product's actual use as home fuel does not expand a statute's specific list of exempt fuels.
• Wood-derived fuel and grain fuel were treated differently under the text applied here.
• Equipment exemptions do not automatically exempt consumable fuel.
• The stove exemption discussed in the ruling expired in 2012; verify current law for any modern sale.

Common questions

Did corn qualify because a corn stove works like a wood stove? No. The exemption named firewood but not corn.

Were wheat, barley, and rye treated differently? No. The ruling found all four grains taxable as home fuel.

Was the multifuel stove exempt? The ruling describes a temporary exemption for qualifying stoves, but not for the fuels used in them.

Citations and references

• Va. Code § 58.1-609.10(1) and former § 58.1-609.10(18).
• 23 VAC 10-210-630 and 23 VAC 10-210-540.
• P.D. 95-141 (June 2, 1995).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 07-159

Original ruling text

October 17, 2007

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the "Taxpayer"), in which you request a ruling on the application of the retail sales and use tax to the sale of corn, wheat, barley and rye to individuals for domestic consumption in home heating. I apologize for the delay in responding to your correspondence.

FACTS

The Taxpayer is a retailer of farm supplies. The Taxpayer's customers are requesting to purchase corn (typically packaged and sold as feed for animals) exempt of the tax. The customers are purchasing the corn to be burned as a fuel source in a corn-burning stove. The heat generated by burning the corn serves as a heat source for the customers' homes. The corn-burning stove functions similarly to a wood-burning stove. Because wheat, barley and rye can also be used as a fuel source for home heating, the Taxpayer requests that this ruling also address those products.

RULING

Virginia Code § 58.1-609.10 1 provides that the retail sales and use tax does not apply to:

Artificial or propane gas, firewood, coal or home heating oil used for domestic consumption. Domestic consumption means the use of artificial or propane gas, firewood, coal or home heating oil by an individual purchaser for other than business, commercial or industrial purposes. The Tax Commissioner shall establish by regulation a system for use by dealers in classifying individual purchases for domestic or nondomestic use based on the principal usage of such gas, wood, coal or oil.

Title 23 of the Virginia Administrative Code (VAC) 10-210-630 further defines the types of fuels used for domestic consumption that are covered by the exemption.

The Virginia courts have consistently required strict construction of tax exemptions. Based on principles established by the courts, Title 23 VAC 10-210-540 provides that exemptions from the retail sales and use tax are strictly construed, i.e. , where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption.

The statutory language and the regulation very specifically state the types of fuels that are subject to the exemption and do not provide for the exemption to apply to other products used as fuel for home heating purposes. Accordingly, the exemption that applies to fuels for domestic consumption does not apply to the Taxpayer's sale of corn, wheat, barley and rye to its customers for home fuel consumption.

The determination of the Tax Commissioner in Public Document 95-141 (6/2/95), cited in your letter, does not apply in this instance. The pellets that qualified for exemption in that case were derived from wood, which is listed in the statute as a fuel qualifying for the exemption.

You should note that 2007 House Bill 1640 (Chapter 84, 2007 Acts of Assembly ) provides an exemption from the retail sales and use tax for multifuel heating stoves purchased for use in heating an individual's residence. A multifuel heating stove is a stove capable of burning a wide variety of alternative fuels, including, but not limited to, shelled corn, wood pellets, cherry pits and olive pits. The exemption, which became effective July 1, 2007 and expires July 1, 2012, applies to qualifying heating stoves but not to the alternative fuels used in such stoves. See Va. Code § 58.1-609.10 18.

This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

The Code of Virginia section, regulations and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this response, you may contact * in the Department's Office of Policy and Administration, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-1055135870P