What counted as a small quantity of domestic-use propane, and was the Virginia rule applied per sale or by averaging transactions?

Subject

Exemption applicable to the sale of small quantities of propane gas

Plain-English summary

Virginia generally treated a filled portable propane cylinder of 20 or 34 pounds or smaller as a "small quantity" for the domestic-consumption fuel rule. The regulation itself did not state an exact amount, so the Tax Commissioner relied on the clarification in Public Document 14-3.

The small-quantity test applied to each sale. A dealer could not average total units over a month, quarter, or year.

The rule excused the dealer from obtaining an exemption certificate only when sales receipts or daily sales records clearly showed the gallons or other measure of the specific fuel sold and the number of purchasers.

What this means for you

• Evaluate each propane transaction separately.
• Keep quantity-specific receipts or daily records and purchaser counts.
• The cylinder guidance was general and historical; verify current domestic-fuel exemption rules before applying it today.

Common questions

Q: Is a 20-pound propane cylinder a small quantity?
A: The ruling generally said yes when a small portable 20-pound cylinder was filled to capacity.

Q: What about a 34-pound cylinder?
A: It was also given as an example of a small portable tank treated as a small quantity.

Q: Can a dealer average propane sales over the month?
A: No. The definition was applied to each sale.

Citations and references

• 23 VAC 10-210-630(D).
• Public Document 14-3.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 14-52

Original ruling text

April 15, 2014

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This is in response to your letter in which you request clarification of the retail sales and use tax exemption applicable to the sale of small quantities of propane gas used for domestic consumption.

The Taxpayer poses two questions which are set out below and followed by my responses.

Question 1

How does the tax commission define "small quantity' as related to propane/LP gas?

Response: Subsection D of Title 23 of the Virginia Administrative Code 10-210-630 provides the following:

Dealers will not be required to obtain a certificate of exemption on sales of small quantities of kerosene, firewood, or other fuels, provided sales receipts or daily sales records are available which clearly indicate the number of gallons (or other measure) of the specific type of fuel sold and the number of purchasers. [Emphasis added.]

The Department recently issued Public Document 14-3 (1/13/14). It clarified the "small quantities" phrase in the above cited regulation by setting out the following: "While the regulation does not indicate exactly what amount is considered a small amount, I would generally deem a small portable propane gas cylinder (such as a 20 or 34 pound tank or smaller) that is filled to capacity to contain a small quantity of propane gas."

Question 2

Once defined, how does the tax commission apply the small quantity definition? To each sale or to an average of sales units divided by the total number of sales for the month/quarter/year? Another method?

Response: The small quantity definition is applied to each sale. As noted by the above cited regulation, each sale should be supported either by a sales receipt or a daily sales record that clearly indicates the number of gallons (or other measure) of the specific type of fuel sold and the number of purchasers.

The regulation and public document cited are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site. If you have any questions about this ruling, please contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-5623298141.R