On October 16, 2012, the Virginia Department of Taxation issued two identical determinations in which it found cable set-top boxes (a/k/a “converters”) exempt from the Business Tangible Personal Property (BTPP) tax (Ruling Nos. PD 12-162 and PD 12-163). Intangible personal property generally is exempt from the BTPP tax. Section 58.1-1101 of the Virginia Code classifies certain tangible personal property as intangible for property tax purposes. Currently, section 58.1-1101.A.2a treats personal property used in cable television businesses as exempt intangible personal property; however, “machines” of such businesses are subject to the BTPP tax.

The Department rejected the contention of Chesterfield and Virginia Beach that converters constitute taxable “machines.” The Department recognized that the 1983 version of section 58.1-1101.A.2a treated converters as taxable tangible personal property, but noted that the General Assembly amended the statute one year later and removed the term “converters” from the list of property that was subject to the BTPP. The legislature’s actions, the Department concluded, evidenced an intent to treat converters as exempt intangible personal property.

Determinations from the Virginia Department of Taxation can be found at this link under “Rulings of the Tax Commissioner.”