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Wholesale ISPs Ineligible for Virginia Sales Tax Exemption for Internet Service Equipment

Thursday, November 14, 2013
By Christopher Young

Nov. 12 -- A wholesale Internet service provider (ISP) is not eligible for the sales and use tax exemption for Internet service equipment because a wholesale ISP sells or resells Internet services to other ISPs, not to end-user subscribers, the Virginia Tax Commissioner advised.

According to the ruling (PD 13-179), the taxpayer is a wholesale ISP that operates an Internet backbone and provides wholesale dial-up and high-speed Internet access to retail ISPs, which in turn sell such access along with Internet services to end-user subscribers. In providing its Internet access service, the taxpayer leases certain operating equipment that it claims qualifies for the exemption.

Under Va. Code Ann. Section 58.1-609.6(2), tangible personal property used to provide “Internet service” is exempt from retail sales and use tax. Specifically, eligible property must be used to provide Internet access, access to proprietary and other content, and electronic mail as part of a package of services that are sold to an end-user subscriber.

To contact the reporter on this story: Christopher Young in Washington at

To contact the editor responsible for this story: Karen Irby in Washington at

Text of the ruling is at

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