I bought sterling silver flatware from an online auction -- does it qualify for Virginia's sales tax exemption for silver bullion?

Plain-English summary

A taxpayer wrote to the Department asking whether sterling silver flatware and hollowware he'd purchased qualified for Virginia's sales tax exemption on precious-metal bullion and legal tender coins (Va. Code § 58.1-609.1 19). That exemption covers gold, silver, or platinum bullion or legal tender coins where the transaction's sales price exceeds $1,000. Under Virginia Tax Bulletin 15-6 (P.D. 15-133), qualifying items must be (1) refined, (2) at least 90% precious metal, and (3) priced based on fluctuation with the underlying metal's market price -- not on the item's rarity, condition, age, or other collectible qualities.

The taxpayer's own evidence undercut his claim. He submitted a receipt showing his flatware purchase came from an online auction site, listing the pattern and number of pieces. The Department reasoned that auction bidding on flatware described by pattern and piece count could easily reflect interest in the pattern, age, or usability of the set -- not just its silver content. Because the seller didn't appear to have structured the sale so its price was tied strictly to the market price of the silver itself, the transaction didn't fit the exemption's required form. The Department also flagged, separately, that it was questionable whether the flatware even met the exemption's 90%-precious-metal purity threshold based on the documentation the taxpayer had provided. Since Virginia strictly construes tax exemptions against the taxpayer claiming them (per Commonwealth v. Community Motor Bus Co. and Golden Skillet Corp.), any doubt on either point worked against the exemption applying.

A second, unrelated question was outside the Department's authority. The taxpayer also asked whether Virginia could legally mint and circulate its own currency. The Department explained this isn't a tax question within its jurisdiction and pointed him to the Virginia Department of the Treasury instead.

What this means for you

Anyone buying silver, gold, or platinum items and hoping to claim Virginia's bullion exemption

The exemption is narrow and applies only when the price is tied to the metal's market value, not to collectible, decorative, or antique appeal. Buying flatware, jewelry-adjacent silverware, or similar items at auction -- where the price reflects pattern, condition, or rarity -- generally won't qualify, even if the item happens to be made of qualifying-purity silver.

Dealers or buyers documenting a bullion-exemption transaction

Make sure the transaction record shows the price was driven by metal weight/purity rather than collectible factors, and confirm the item independently meets the 90%-precious-metal purity threshold -- this ruling shows the Department will scrutinize both elements closely, and doubt on either one defeats the exemption.

Common questions

Q: Does buying silverware or flatware made of sterling silver automatically qualify for Virginia's precious-metal bullion sales tax exemption?
A: No. Per this ruling, the exemption requires the sales price to depend solely on the market price of the underlying metal -- not on the item's pattern, age, or collectible appeal, which is common in flatware sales.

Q: What has to be true about a precious-metal purchase for it to qualify for Virginia's bullion exemption?
A: Under Va. Code § 58.1-609.1 19 and VTB 15-6, the metal must be refined, at least 90% gold/silver/platinum (or a combination), and its price must fluctuate with the market price of the metal itself, not other factors like rarity or condition.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-609.1 19 -- exempts gold, silver, or platinum bullion and legal tender coins over $1,000 per transaction
• Commonwealth v. Community Motor Bus Co., Inc., 214 Va. 155 (1973) -- sales tax exemptions are strictly construed against the taxpayer
• Golden Skillet Corp. v. Commonwealth, 214 Va. 276 (1972) -- same strict-construction rule

Prior rulings referenced (described here, not linked): Virginia Tax Bulletin 15-6, issued as P.D. 15-133 (6/26/2015) -- sets out the requirements for the bullion exemption: refined, at least 90% precious metal, and priced based on market fluctuation of the metal itself.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 23-117

Original ruling text

October 19, 2023

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 its purchase of sterling silver flatware. I apologize for the delay in responding to your correspondence.

FACTS

The Taxpayer purchased sterling silver flatware. The Taxpayer requests a ruling to determine if sterling silver flatware and hollowware meet the criteria for the exemption. The Taxpayer also asks if the Commonwealth of Virginia is legally allowed to mint and circulate its own currency and, if so, why the state has not done so.

RULING

Bullion and Legal Tender Exemption

Virginia Code § 58.1-609.1 19 provides an exemption from the retail sales and use tax for the following:

…gold, silver, or platinum bullion or legal tender coins whose sales price exceeds $1,000. Each piece of gold, silver, or platinum or legal tender coin need not exceed $1,000, provided that the sales price of one entire transaction of such pieces exceeds $1,000. "Gold, silver, or platinum bullion" means gold, silver, or platinum, and any combination thereof, that has gone through a refining process and is in a state or condition such that its value depends on its mass and purity and not on its form, numismatic value, or other value. Gold, silver, or platinum bullion may contain other metals or substances, provided that the other substances by themselves have minimal value compared with the value of the gold, silver, or platinum. "Legal tender coins" means coins of any metal content issued by a government as a medium of exchange or payment of debts. "Gold, silver, or platinum bullion" and "legal tender coins" do not include jewelry or works of art.

Virginia Tax Bulletin (VTB) 15-6, issued as Public Document (P.D.) 15-133 (6/26/2015) states that the exemption “extends to gold, silver, or platinum in the form of bars, ingots, or coins…” Further, the gold, silver, and platinum items must meet all of the following requirements:

• Must be refined;

• Must contain at least 90 percent gold, silver or platinum, or some combination of these metals; and

• The sales price of the item must fluctuate with and depend on the market price of the underlying precious metal, and not on the item’s rarity, condition, age, or other external factor.

The Department is bound by the doctrine of strict construction in interpreting the retail sales and use tax regulations. The Virginia courts have consistently held that exemptions from the tax must be strictly construed and where there is any doubt, that the doubt must be resolved against the person claiming the exemption. See Commonwealth v. Community Motor Bus Co., Inc ., 214 Va. 155 (1973) and Golden Skillet Corp. v. Commonwealth , 214 Va. 276 (1972).

According to the Taxpayer, the sterling silver flatware and hollowware meet the first two requirements to qualify for the exemption. Please note that dealers of gold, silver, or platinum bullion are required to maintain proper documentation of exempt transactions, including the form and fine metal content of the precious metal bullion sold. See VTB 15-6. Based on the documentation provided by the Taxpayer, it is questionable whether the dealer in this case believes that the 90% requirement is met.

However, the issue presented for purposes of this ruling is whether the sterling silver flatware in this case was in a state or condition such that its value depended on its mass and purity and not on its form, numismatic value, or other value. Based on VTB 15-6, a key determinant is whether the sales price was subject to fluctuation solely based on the price of the underlying precious metal.

With their request, the Taxpayer provided a copy of a receipt showing a purchase of sterling silver flatware from an online auction cite. The receipt indicates the pattern and number of pieces of the flatware. Based on the description of the flatware, it appears likely that bids could have been made for a number of reasons. While the Taxpayer claims he was only interested on the value of the silver, other browsers or bidders may have been more interested in the pattern, age, or potential use of the flatware. Because the seller did not appear to limit the sales price to fluctuation based on the price of the underlying precious metal, the transaction is not in the form required to be eligible for the exemption for bullion and legal tender.

Legal Currency

The Taxpayer’s second question regards the legality of state issued currency. As this is not a tax issue under the jurisdiction of the Department, this ruling is unable to address this question. I would suggest that the Taxpayer contact the Virginia Department of the Treasury for information related to this question.

This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections cited, along with other reference documents, 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 response, you may contact * in the Department’s Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/3907.G

Related Documents

15-133