Did a commercial printer owe Virginia litter tax when it printed envelopes, stationery, brochures, letterhead, and business cards but not newspapers or magazines?

Subject

Taxpayer has been remitting this tax in error and request refunds.

Plain-English summary

A commercial printer produced envelopes, stationery, advertising brochures, letterhead, and business cards. It did not print newspapers or magazines, but had been filing and paying Virginia's annual litter tax because it considered itself a manufacturer.

Virginia ruled that the printer was not a manufacturer, wholesaler, distributor, or retailer of covered paper products for litter-tax purposes. The statute applied to businesses handling listed product categories, including newspapers, magazines, and paper or household-paper products. Existing guidance explained that putting an image on paper did not make every printer a covered paper-products business.

The company no longer had to remit the annual litter tax. Under the three-year refund authority and the timing of its March 27, 2006 ruling request, Virginia allowed refunds for tax years 2002 through 2004 and any later years for which the company had paid the tax, subject to submitting the ruling and returns through the refund process.

What this means for you

• Litter-tax liability turned on the listed products the business manufactured or sold, not merely on using paper in a printing process.
• Printers of newspapers or magazines were expressly distinguished from this business's commercial print products.
• Erroneous payments were refundable only through the applicable claim process and time period.

Citations and references

• Va. Code §§ 58.1-1707 and 58.1-1708, annual litter tax and covered product categories.
• Va. Code § 58.1-1823, refund authority within three years after payment.
• P.D. 88-164 (June 29, 1988), litter-tax treatment of printers.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 07-46

Original ruling text

April 26, 2007

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the "Taxpayer") requesting a ruling regarding the Taxpayer's liability for the litter tax. I apologize for the delay in responding to your correspondence.

FACTS

You represent that the Taxpayer is a printing company that has been remitting the litter tax to the Department of Taxation. It has come to the Taxpayer's attention that other printers located near the Taxpayer have not been assessed this tax. The Taxpayer believes that it has been remitting this tax in error. The Taxpayer is a commercial shop that prints envelopes, stationery, brochures (items for advertising agencies), letterhead and business cards. You also indicate that the Taxpayer is a manufacturer, but does not print magazines or newspapers.

RULING

Virginia Code § 58.1-1707 A provides that "[there is hereby levied and imposed upon every person in the Commonwealth engaged in business as a manufacturer, wholesaler, distributor or retailer of products enumerated in § 58.1-1708 an annual litter tax of ten dollars for each establishment from which such business is conducted."

Further, Virginia Code § 58.1-1707 provides that manufacturers, wholesalers, distributors or retailers of the following products shall be subject to the tax imposed in

§ 58.1-1707:

1. Food for human or pet consumption;

2. Groceries;

3. Cigarettes and tobacco products;

4. Soft drinks and carbonated waters;

5. Beer and other malt beverages;

6. Wine;

7. Newspapers and magazines;

8. Paper products and household paper;

9. Glass containers;

10. Metal containers;

11. Plastic or fiber containers;

12. Cleaning agents and toiletries;

13. Nondrug drugstore sundry products;

14. Distilled spirits; and

15. Motor vehicle parts.

In Public Document (P.D.) 88-164 (6/29/88), the Tax Commissioner ruled that "rather than applying to all manufacturers, wholesalers, distributors or retailers of any type of printed material, the litter tax only applies to printers of certain types of products. Clearly, those printers which print newspapers and magazines are subject to the tax . . . [t]he mere imprinting of an image onto paper does not make a printer a manufacturer, wholesaler, distributor or retailer of paper products for purposes of the litter tax."

Pursuant to Va. Code §§ 58.1-1707, 58.1-1708 and P.D. 88-164, the Taxpayer is not a manufacturer, wholesaler, distributor or retailer of paper products for purposes of the litter tax. Accordingly, the Taxpayer is not liable for the litter tax and is not required to remit the annual litter tax to the Department.

Virginia Code § 58.1-1823 authorizes the refund of any tax administered by the Department within three years from the date such tax was paid. Accordingly, the Taxpayer is entitled to a refund for the erroneously remitted litter tax. Please contact the Department's Customer Service Unit to start the refund process. Please submit a copy of this letter along with copies of the litter tax returns with your refund request. Based on the fact that your ruling request was received March 27, 2006, and the litter tax return for a taxable year (i.e., the previous calendar year) is due by May 1, I will allow the Taxpayer to receive refunds for taxable years 2002-2004, and for any subsequent taxable years for which the litter tax was paid.

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 sections 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 Office of Policy and Administration, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-616351101P