On January 10, 2013, the Virginia Tax Commissioner issued Ruling P.D. 2-13 reversing the Department of Taxation’s position from a ruling in 2012 (P.D. 12-73) on the pollution control tax exemption related to coal, oil and gas production. The Department will now retroactively recognize the pollution control tax exemption for coal, oil and gas production.
Virginia exempts pollution control equipment and facilities from taxation if they have been certified by the Department of Mines, Minerals and Energy (DMME). Pollution control equipment and facilities are defined by statute as:
“... any property, including real or personal property, equipment, facilities, or devices, used primarily for the purpose of abating or preventing pollution of the atmosphere or waters of the Commonwealth and which the state certifying authority having jurisdiction with respect to such property has certified to the Department of Taxation as having been constructed, reconstructed, erected, or acquired in conformity with the state program or requirements for abatement or control of water or atmospheric pollution or contamination.”
In this specific ruling, the pollution control tax exemption was determined to apply to pit liners and storage tanks used to abate or control pollution or contamination. Taxpayers with coal, oil or gas operations in Virginia should review their activities and purchases in Virginia for opportunities to utilize the exemption in light of the Department’s clarified position. An eligible business must acquire the necessary certifications from the DMME and maintain records for the Department in the event of a sales/use tax audit.
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