Section 351. Commercial watermen; typical exempt items; direct use; dual use of equipment

A. A commercial waterman's purchase of the following items will not be subject to the tax if directly used in the commercial fishing operation:

1. Anchors;

2. Bait;

3. Bilge pump;

4. Boat and boat motors;

5. Boat rudder and stock;

6. Boat steering gear;

7. Boat hook;

8. Boom and gaff on commercial fishing vessel;

9. Compass;

10. Crab-pot rope and wire;

11. Depth finder;

12. Dredge and equipment including all deck and components and repairs thereof;

13. Drive shaft and propeller;

14. Engines and other equipment;

15. Floats for net or crab-pot;

16. Foul-weather clothing worn while extracting seafood from waters;

17. Fuel;

18. Gas tanks;

19. Gill net and all types of nets for extracting seafood;

20. Hand tools used in extracting seafood;

21. Ice for preserving seafood or bait;

22. Inboard and outboard motors;

23. Nails, screws and bolts used on any seafood extracting equipment except the boat itself;

24. Oyster tubs and baskets;

25. Nets and twine;

26. Paint for boats;

27. Poles and stakes used in setting nets and marking ground for seafood;

28. Power block and accessories;

29. Pulley for deck rig or net rigs;

30. Repair parts for exempt equipment;

31. Rope or twine, including wire cable, or chain for boat, net or dredge rig used to extract seafood;

32. Rudder and shaft zincs;

33. Running lights and deck lights;

34. Shovels for handling seafood in the catching process;

35. Sonar equipment to locate fish, bivalves, or crustaceans;

36. Ship-to-shore radios, radar equipment, and other related accessories which are permanently affixed to a boat and become an integral part thereof;

37. Tools such as knives, shovels, etc., used directly in a commercial fishing activity;

38. Trawl doors; and

39. Any other tangible personal property purchased for exclusive use in extracting seafood from waters for commercial purposes.

B. A commercial waterman must directly use a boat, motor, machinery, tools, repair parts, fuel, or supplies in a commercial fishing activity, otherwise the purchase is taxable.

Example. A commercial waterman purchases a boat which he will use to transport both himself and his crew to his fishing vessel which is anchored in the harbor. The commercial waterman uses the boat for transportation purposes only and not for commercial fishing. Since the commercial waterman does not use the boat directly in his commercial fishing operation, the boat will be taxable.

C. A commercial waterman's purchase of an item, which is typically exempt from the tax since it is usually used directly in a commercial fishing operation, for use in a nonexempt manner, is taxable.

Example. A commercial waterman purchases paint to repaint a boat he uses for recreational purposes. Since the commercial waterman uses the boat in a taxable manner, the purchase of the paint is taxable. Had the commercial waterman purchased the paint to repaint the boat he uses in his commercial fishing operation, the purchase would have been exempt from the tax.

D. A commercial waterman's use of supplies or equipment in both an exempt activity and a taxable activity will result in such items being taxable unless he can accurately determine the percentage of use of such items in the commercial fishing activity as compared to his use of the items in a taxable activity. In such case, the commercial waterman can prorate the tax due on the supplies or equipment based upon his percentage of use of such items in the taxable activity.

Historical Notes

Derived from VR630-10-24.1 § 3; added January 1979; revised January 1985; amended, eff. July 1, 1994.

Statutory Authority

§§ 58.1-203 and 58.1-609.2(4) of the Code of Virginia.