Virginia—Sales and Use Tax: Equipment Not Used Directly in the Harvesting of Forest Products Taxable

VIRGINIA: A taxpayer was properly subject to Virginia sales and use tax as the purchase of lime and tractors did not qualify for the exemption for the harvesting of forest products for sale under the Virginia law. Virginia law states that machinery, tools, repair parts, fuel, etc. used directly in the harvesting of forest products for sale or for use as a component part of a product to be sold qualify for the exemption and a harvester’s use of such items indirectly in the harvesting of forest products or in any other activity is subject to the tax.

In this matter, the taxpayer asserted that the purchases were used for reseeding the grounds after harvesting timber and therefore is exempt from the tax. Upon review it was noted that the taxpayer’s purchases of equipment for timber harvesting were not exempt from tax under the applicable law as such activity and items are not used directly in the harvesting of forest products for sale and the taxpayer provided a service to the timber harvesting operation rather than providing a harvested forest product for sale. Ruling of Commissioner, P.D. 21- 66, Virginia Department of Taxation, May 25, 2021, released July 2021

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