Did Virginia's temporary multifuel-stove exemption cover outdoor residential furnaces, their operating parts, and refunds of tax already collected?

Subject

Temporary exemption for residential multifuel furnaces

Plain-English summary

Virginia's temporary exemption applied only to residential furnaces capable of burning alternative fuels. The statute covered multifuel heating stoves used to heat an individual purchaser's residence from July 1, 2007 through July 1, 2012.

A furnace capable of burning alternative fuels could qualify. A furnace that burned only wood or fossil fuels did not. The exemption also did not extend to parts needed to operate a qualifying furnace because the statute exempted the stove, not its parts.

A dealer that had already collected and remitted tax on qualifying sales could request a refund. The dealer first had to prove that it refunded the tax to customers and had to file within three years from the return's due date. Any dealer discount previously taken reduced the state refund.

What this means for you

• The exemption depended on the furnace's actual fuel capability, not simply its outdoor or residential use.
• Wood-only and fossil-fuel-only furnaces did not qualify under this ruling.
• Operating parts remained taxable.
• A dealer refund required repayment to the customer and timely documentation.
• The exemption period stated in the ruling ended July 1, 2012.

Common questions

Did every outdoor wood furnace qualify?

No. The furnace had to be capable of burning alternative fuels.

Were replacement or operating parts exempt?

No. The statute did not extend the exemption to those parts.

Could the dealer recover tax already remitted?

Yes, for qualifying sales, if customers were refunded and the dealer met the three-year filing rule.

Citations and references

• Va. Code § 58.1-609.10(18).
• 23 VAC 10-210-3040.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 08-179

Original ruling text

October 17, 2008

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 on the application of the retail sales and use tax on the sale of outdoor wood furnaces.

FACTS

The Taxpayer is in the business of selling outdoor wood furnaces for the purpose of heating an individual purchaser's residence. The Taxpayer represents that most homeowners use wood as the source for heat, but the stoves are capable of burning a wide variety of fuels with the wood. The Taxpayer further represents that the furnaces are capable of burning renewable, biomass fuels, such as wood and corn. Relying on Va. Code § 58.1-609.10 18, the Taxpayer maintains that the sale of these outdoor furnaces qualifies for the sales tax exemption. The Taxpayer also maintains that the parts needed to operate the furnaces should also be exempt of the tax. The Taxpayer has collected and remitted the tax on sales of outdoor wood furnaces and inquires about the availability of a refund of such tax.

RULING

Multifuel Heating Stoves

Virginia Code § 58.1-609.10 18 provides that beginning July 1, 2007, and ending July 1, 2012, the retail sales and use tax does not apply to "multifuel heating stoves used for heating an individual purchaser's residence. Multifuel heating stoves are stoves that are capable of burning a wide variety of alternative fuels, including, but not limited to, shelled corn, wood pellets, cherry pits, and olive pits."

"Statutes granting tax exemptions are construed strictly against the taxpayer." Commonwealth v. Community Motor Bus Co., Inc. , 214 Va. 155, 198 S.E.2d 619 (1973). "Exemption from taxation is the exception, and where there is any doubt, the doubt is resolved against the one claiming exemption." Golden Skillet Corp. v. Commonwealth , 214 Va. 276, 199 S.E.2d 511 (1972).

The exemption provided in Va. Code § 58.1-609.10 18 applies only to multifuel heating stoves that are capable of burning alternative fuels. Accordingly, the exemption will only apply to sales of furnaces by the Taxpayer that are capable of burning alternative fuels. The exemption, however, does not apply to furnaces that only burn wood or fossil fuels. Additionally, the statute does not provide an exemption for the parts used to make the multifuel heating stoves function. Accordingly, the exemption cannot be extended to these parts as the Taxpayer contends.

Refund of Tax

Title 23 Virginia Administrative Code (VAC) 10-210-3040 provides that a dealer who erroneously collected the tax can request a refund, so long as it can be demonstrated that the tax was refunded to the consumer. Refunds cannot be authorized unless the request is made within three years from the due date of the return. The amount refunded wills be the net amount of state and local tax remitted to the state on the transaction(s) generating the refund. Thus, if a dealer filed a timely return and deducted the dealer's discount for the period the refund is claimed, the amount of refund will be reduced by the dealer's discount taken.

Pursuant to Title 23 VAC 10-210-3040, the Taxpayer may request a refund of tax collected and remitted on sales of furnaces capable of burning alternative fuels made to its customers since July 1, 2007, so long as the Taxpayer is able to provide proof of refunding the tax charged and collected to its customers.

The Code of Virginia and regulation sections 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 Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-2119018731.P