My auditor denied my pollution control equipment refund because I didn't have Form ST-11A -- but I have an environmental permit from the state instead. Does that count?

Plain-English summary

A Virginia brewery requested a refund of use tax it had accrued on tangible personal property used in its facilities, for April 2019 through December 2020. The Department approved a partial refund; the brewery appealed the rest, arguing the remaining purchases qualified for the pollution control exemption and that it had provided enough documentation to prove it.

The exemption. Va. Code § 58.1-609.3 9 exempts "certified pollution control equipment and facilities" as defined in § 58.1-3660 from Virginia's retail sales and use tax -- except equipment that hasn't been "certified to the Department of Taxation by a state certifying authority." 23 VAC 10-210-2090 B defines "pollution control equipment and facilities" as real or tangible personal property, equipment, facilities, or devices used primarily to abate or prevent air or water pollution in Virginia, and states that property certified as used for those purposes "is not subject to the tax." Put together: property is exempt if it's used directly to abate pollution or has been certified as pollution control equipment by a certifying agency (citing P.D. 10-262, P.D. 18-112, P.D. 23-6).

Why the auditor denied it. The auditor denied the pollution-control refund because the brewery hadn't provided Form ST-11A -- the certificate the Department currently requires consumers to issue to vendors in order to buy qualifying pollution control equipment, machinery, and other tangible personal property exempt from tax at the point of sale. Obtaining Form ST-11A requires applying to the Department directly, in writing on business letterhead.

What the brewery provided instead -- and why it was enough. Rather than an ST-11A, the brewery submitted a federal operating permit issued by the Virginia Department of Environmental Quality (DEQ), which stated it was issued under the Administrative Process Act and the State Air Pollution Control Board's regulations (9 VAC 5-80-50 through 9 VAC 5-80-300). The Tax Commissioner confirmed that DEQ is one of the state agencies authorized to verify and certify pollution control equipment for purposes of this exemption -- and reaffirmed the Department's longstanding position that any property certified by the appropriate state certifying authority as pollution control equipment qualifies for the exemption (citing P.D. 91-5, P.D. 04-108, P.D. 12-73, P.D. 23-2). Because the DEQ permit functioned as that certification, the missing ST-11A wasn't fatal.

Outcome. The Department sent the refund request back to the audit staff to issue a refund for the purchases that qualify for the pollution control exemption based on the DEQ certification.

What this means for you

Businesses claiming Virginia's pollution control equipment exemption

Form ST-11A is the Department's own certificate for buying qualifying equipment tax-exempt at the time of purchase from a vendor. But if you're instead pursuing a refund claim after the fact, this ruling shows that documentation from the actual state certifying agency (here, DEQ, for air/water pollution control equipment) can independently establish that your equipment was certified -- even without a separate ST-11A on file.

Manufacturers, breweries, and other industrial operations with environmental permits

Keep your DEQ (or other state environmental agency) permits and certifications on hand -- they can double as proof for this sales tax exemption, not just for environmental compliance.

Anyone denied this exemption solely for a missing ST-11A

Ask whether you have other state-agency certification of the equipment's pollution-control function. The Department's position is that certification by the appropriate state authority is what qualifies the property -- the ST-11A is the Department's own mechanism for a vendor-side exemption, not the only way to prove certification exists.

Common questions

Q: Do I need Form ST-11A to claim Virginia's pollution control equipment exemption?
A: It's the standard way to buy qualifying equipment exempt from a vendor at the time of sale. But for a refund claim after the fact, other proof of certification by an authorized state agency -- like a DEQ operating permit in this ruling -- can also establish the exemption.

Q: Which state agencies can certify equipment as "pollution control" for this exemption?
A: This ruling confirms the Virginia Department of Environmental Quality (DEQ) is one of them, for equipment covered by the State Air Pollution Control Board's regulations.

Q: My auditor denied my refund because I didn't have an ST-11A -- is that the end of it?
A: Not necessarily. If you have other documentation showing the equipment was certified by the appropriate state agency, ask the Department to consider it, as happened here.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-609.3 9 -- sales and use tax exemption for certified pollution control equipment and facilities as defined in § 58.1-3660, except equipment not certified to the Department by a state certifying authority
• 23 VAC 10-210-2090 -- defines pollution control equipment and facilities; certified property is not subject to the tax

Authorities the Department relied on (described here, not linked): P.D. 10-262 (12/14/2010), P.D. 18-112 (6/8/2018), and P.D. 23-6 (1/11/2023) (property used directly to abate pollution, or certified as pollution control equipment, is exempt); P.D. 91-5 (1/23/1991), P.D. 04-108 (9/14/2004), P.D. 12-73 (5/9/2012), and P.D. 23-2 (1/6/2023) (property certified by the appropriate state certifying authority qualifies for exemption).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 24-116

Original ruling text

November 14, 2024

RE: § 58.1-1821 Refund Application: Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the “Taxpayer”) requesting correction of a denied refund request for retail sales and use tax for the period April 2019 through December 2020.

FACTS

The Taxpayer, a brewery in Virginia that produces a variety of beverages for consumption, requested a refund on use tax accrued on a number of items of tangible personal property used in its facilities. The Department reviewed the request and approved a partial refund. The Taxpayer appeals the remainder of the claim asserting that the purchases qualify for the pollution control exemption and that the documentation provided was sufficient to support its claim.

DETERMINATION

Virginia Code § 58.1-609.3 9 provides an exemption from the retail sales and use tax for “[c]ertified pollution control equipment and facilities as defined in § 58.1-3660, except for any equipment that has not been certified to the Department of Taxation by a state certifying authority pursuant to such section.” Title 23 of the Virginia Administrative Code 10-210-2090 addresses the sales and use tax exemption for pollution control equipment and facilities. Subsection B defines “pollution control equipment and facilities” as “any real or tangible personal property, equipment, facilities or devices used primarily for the purpose of abating or preventing air or water pollution in Virginia.” The regulation goes on to say that “[a]ny property which is certified as used for these purposes is not subject to the tax…” [Emphasis added.] Thus, within the context of examining the books and records for purchases by a business, property or facilities are exempt from the retail sales and use tax if it is used directly to abate pollution or has been certified as pollution control equipment by a certifying agency. See Public Document (P.D.) 10-262 (12/14/2010), P.D. 18-112 (6/8/2018), and P.D. 23-6 (1/11/2023).

The auditor denied the refund for the pollution control equipment because Form ST-11A had not been provided. In its refund request, the Taxpayer provided a federal operating permit issued by the Virginia Department of Environmental Quality (DEQ) that states “this permit is issued consistent with the Administrative Process Act, and Title 9 of the Virginia Administrative Code (VAC) 5-80-50 through Title 9 VAC 5-80-300 of the State Air Pollution Control Board Regulations for the Control and Abatement of Air Pollution of the Commonwealth of Virginia.”

DEQ is one of the state agencies authorized to verify pollution control equipment for purposes of the exemption. As such, DEQ is responsible for evaluating and issuing the appropriate certification. The Department’s position is that any property certified by the appropriate state certifying authority as pollution control equipment and facilities qualify for exemption from the tax. See P.D. 91-5 (1/23/1991), P.D. 04-108 (9/14/2004), P.D. 12-73 (5/9/2012), and P.D. 23-2 (1/6/2023).

With regard to the Form ST-11A, the Department currently requires consumers to issue this certificate to make exempt purchases of qualifying pollution control equipment, machinery, and other tangible personal property from vendors. Consumers must apply to the Department for the Form ST-11A. In order to obtain this certification of exemption, an applicant should submit a written request to the Department on its business letterhead and provide the required information. See the Department’s website for more information.

In accordance with this determination, the Taxpayer’s refund request will be returned to audit staff in order to issue a refund for purchases that qualified for the pollution control exemption.

The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, and Decisions section of the Department’s website. If you have any questions about this response, you may contact * in the Department’s Office of Tax Policy, Appeals and Rulings, at (804) or **@tax.virginia.gov.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

Related Documents

91-5

04-108

10-262

12-73

18-112

23-2

23-6