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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department Of Taxation
Chapter 210. Retail Sales and Use Tax
2/25/2021

23VAC10-210-382. Railway common carriers; taxable status of property used in primary railway activities.

Following are descriptions and examples of taxable and exempt uses of tangible personal property attributable to the four primary railway activities. The listings of items for each activity are intended to be representative, but not exhaustive.

1. Way and structures (Accounts 1-43 and 45 of the Uniform System of Accounts). Tangible personal property used in this activity is generally subject to the tax to the extent it is not an integral part of a railway's roadbed. Taxable property includes materials used to construct or erect most structures (station and office buildings, roadway buildings, sidewalks, driveways, etc.); structures carrying public roads; railway tunnels (except rails and roadbed); and items used in administrative support of the activity. Exempt items used directly in the rendition of common carrier service include rails; ties; roadbed materials; materials used to construct or erect railway bridges and trestles (except foundations); materials used to construct or erect piers, wharves and docks (except foundations); and signals. Tangible personal property, i.e. machinery, tools, etc., used to produce exempt tangible personal property such as signals, track materials, etc., is considered to be used indirectly in the rendition of common carrier service and is taxable.

Taxable:

Expenses and supplies of the type listed in account 1, engineering, of the Uniform System of Accounts, including atlases and maps, books, furniture, stationery, etc.; surveying equipment, supplies, tripods, etc.;

Other supplies and equipment used in providing administrative support or for the personal comfort of employees;

All material used to repair general offices, shops, stations, roadway buildings, air conditioning, plumbing and heating, etc.;

Materials used in the construction, repair or maintenance of station and office building structures, roadway building structures, water station structures, fuel station structures, shop and enginehouse structures, storage warehouses, terminal building structures, dams and canals, power plant building structures, and employee and other parking lots;

Materials used in the construction, repair or maintenance of public improvements, including bridges and grade crossings used to carry public or private roads over, under, or across railway tracks;

Materials used in the construction, repair or maintenance of tunnels (except rails and roadbed);

Power plant machinery;

Telephones, switchboards, and other communications systems used for administrative purposes;

Tangible personal property used in work on roads, sidewalks, ditches, drains, right-of-way (other than track, roadbed, and signals), etc; and

Security fences around track, railyards, etc.

Exempt:

Ties, rails and spikes;

Ballast;

Switches and switch heaters;

Track panels, frogs, turnouts, cribbing, and similar track material;

Materials used to construct or erect railway bridges, trestles, piers, wharves, and docks, except that materials used in the foundations of such structures are taxable;

Signals and interlockers, including signals used for protection at grade crossings, crossing gates, and grade crossing warning bells;

Centralized traffic controls, visual and electronic train monitoring and control systems;

Tangible personal property used by a railway common carrier to clear and grade for roadway, and lay down roadway;

Equipment, tools, and supplies used by a railway common carrier to install, maintain, and repair track, ties, roadbed, signals; monitoring and control systems, and traffic control systems; however, tangible personal property used in the fabrication or production of exempt tangible personal property is deemed to be used indirectly in the rendition of common carrier service, for instance machinery used to produce exempt signal systems is taxable;

Repair and replacement parts, fuel, and supplies used to repair and maintain exempt revenue equipment and equipment used to service or repair exempt revenue equipment tract and communications systems; and

Coal pier and other bulk commodity loading, unloading, and thawing equipment.

2. Equipment (Accounts 44 and 52-58 of the Uniform System of Accounts). Tangible personal property, other than administrative supplies, employee comfort supplies, and equipment and structures of all types, used in this activity is exempt from the tax.

Taxable:

Arm rests and cab cushions (other than for passenger use);

Clocks;

Beds and bedding (other than for passenger use);

Furniture (other than for passenger use);

Kitchen equipment and supplies (other than for passenger use);

Instructional cars;

Ditching cars;

Officers' cars;

Business cars;

Painters' cars;

Pay cars;

Scale test cars; and

Supplies and equipment used to maintain or repair company automobiles and general purpose trucks;

Materials and supplies used for the upkeep of shop and repair facilities; and computer systems used for general administrative and financial accounting purposes.

Exempt:

Fire extinguishers used on revenue equipment;

Locomotives;

Freight cars;

Passenger cars;

Dynamometer cars;

Tool cars;

Ballast cars;

Rail test cars (rail test cars may be subject to the motor vehicle sales and use tax, however);

Wreck cranes;

Weed burners;

Snowplow equipment used to clear track to allow for passage of revenue equipment except snow removal equipment for general yard use;

Highway revenue equipment including chassis and containers;

Floating equipment used for the transportation of freight or passengers;

Computer systems used for guidance, monitoring or control of train movements;

Tangible personal property used in the repair and maintenance of revenue equipment, including wheel truing machines, electric testing equipment, cranes, locomotive and car rebuilding machinery, etc.

Tangible personal property used in cleaning and painting (including lettering) revenue equipment; and

Tangible personal property used in clearing wrecks.

3. Transportation. Tangible personal property used in this activity is generally exempt from the tax as this activity relates primarily to the direct operation of railways. Of course, administrative support activities and activities which are indirectly a part of rendition of common carrier service are taxable.

Taxable:

Crew meals and loading;

Tangible personal property used in supporting activities such as sorting and handling waybills, reporting car movement data, etc., except equipment for communication between monitoring and control personnel and revenue equipment; and

Tangible personal property used for general administrative purposes or for the comfort of employees.

Exempt:

Equipment used in switching trains;

Equipment used in fueling, lubricating, maintaining, and repairing revenue and service equipment;

Equipment used on revenue equipment to maintain commodities (freight) at constant temperatures;

Equipment used in and for communication between monitoring and control personnel and revenue equipment;

Tangible personal property used in receiving, sorting, and loading freight, containers, or trailers or in adjusting or transporting loads, including scales, forklifts, conveyer systems, piggybackers, racks, hand trucks, packing material, straps, blocking and bracing materials, chains, and waybills, freight bills or bills of lading carried with the freight being transported; and

Decals and lettering used on revenue equipment.

NOTE: In the case of the way and structures, equipment, and transportation activities, tangible personal property used in the servicing, maintenance or repair of tangible personal property is exempt from the tax only to the extent that the tangible personal property serviced, maintained or repaired is exempt from the tax.

4. General and administrative. Tangible personal property used in the general and administrative activity is taxable. Such property includes office supplies, office equipment, furniture, tariff rate schedules, billing supplies and equipment, payroll supplies and equipment, etc.

Statutory Authority

§§ 58.1-203 and 58.1-609.3(3) of the Code of Virginia.

Historical Notes

Derived from VR630-10-24.4 § 4, eff. February 1, 1987.

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