A Virginia taxpayer and Internet Services Provider failed to provide proper documentation that their services qualify for the Internet Service Provider (ISP) exemption. The exemption requires that internet services are being provided to the end user subscriber, and therefore will not be sold or resold again. Because the taxpayer did not provide the documentation to prove this requirement, the exemption was properly denied and they were denied a refund.
The taxpayer also claimed the mixed-use exemption which is for equipment used for multiple activities. The exemption cannot be applicable for 100% of the equipment if it is used for both exempt and non-exempt activities. Sales tax must be prorated for mixed-used equipment. (Ruling of Commissioner, P.D.20-73, Virginia Department of Taxation, May 5, 2020, released July 2020)