Tax Type
Retail Sales and Use Tax
Description
Furniture delivered to purchaser in Virginia
Topic
Collection of Delinquent Tax
Property Subject to Tax
Date Issued
04-26-2000
April 26, 2000
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek the correction of a use tax assessment issued to you (the "Taxpayer") for the period September 1996. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer was assessed consumer's use tax on the purchase of furniture from an out-of-state furniture dealer who delivered the furniture to the Taxpayer's Virginia residence. The Taxpayer's husband is currently stationed in Virginia with the United States Coast Guard and expects to be transferred to another state sometime in the year 2000. The Taxpayer maintains that Code of Virginia § 58.1-604 allows the proration of the use tax due on the furniture purchase based on the time the furniture is used in Virginia.
DETERMINATION
Code of Virginia § 58.1-604 imposes a use tax on the use or consumption of tangible personal property in Virginia. Code of Virginia § 58.1-604(1) states in part:
Tangible personal property which has been acquired for use outside this Commonwealth and subsequently becomes subject to the tax. . . shall be taxed on the basis of its cost price if such property is brought within this Commonwealth for use within six months of its acquisition; but if so brought within this Commonwealth six months or more after its acquisition, such property shall be taxed on the basis of the current market value (but not in excess of its cost price) of such property at the time of its first use within this Commonwealth. Such tax shall be based on such proportion of the cost price or current market value as the duration of time of use within this Commonwealth bears to the total useful life of such property (but it shall be presumed in all cases that such property will remain within this Commonwealth for the remainder of its useful life unless convincing evidence is provided to the contrary). (Emphasis added.)
Code of Virginia § 58.1-604 provides for proration of the use tax based on actual usage in Virginia under extremely limited circumstances, i.e., when tangible personal property has been acquired for use outside this Commonwealth and subsequently becomes subject to the Virginia tax. In the Taxpayer's case, the furniture was not acquired for use outside the Commonwealth within the meaning of the statute. In addition, the furniture did not subsequently become subject to the tax. The seller delivered the furniture to the Taxpayer in Virginia. Since the Taxpayer took possession of the furniture in Virginia, first use of the furniture occurred in Virginia and the imposition of the tax was triggered at the moment of first use. The furniture did not become subject to tax after it was used outside this state, as the statute requires.
This position is further substantiated by Title 23 of the Virginia Administrative Code 10-210-6030(D), copy enclosed, which states that "[t]angible personal property purchased for use outside the state but later brought into the state is taxed based on the proportion of the cost price or fair market value as the duration of time of use within this state bears to the total useful life of the property." The enclosed copy of Public Document 88-152 (6/23/88) also illustrates the department's policy.
Based on the facts presented, there is no basis to prorate the Taxpayer's use tax assessment. The balance of the assessment is correct and should be paid within 60 days from the date of this letter to avoid the accrual of additional interest. Payment for the current balance of $**** may be mailed to in the Office of Tax Policy, P. O. Box 1880, Richmond, Virginia 23218-1880. If the payment is not received within the allotted time, an updated bill will be issued to the Taxpayer. If you have any questions regarding this letter, please contact **** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20185S
TO WHOM IT MAY CONCERN
Under the authority of § 58.1-1 of the Code of Virginia, l hereby delegate to Janie E. Bowen, Assistant Tax Commissioner, the authority to sign for me any and all documents, including, but not limited to, affidavits, warrants, rulings, appeals, offers in compromise and sales tax revocations.
This authority shall not extend to matters or documents related to my service on any statutorily created board or commission, including, but not limited to, the Compensation Board and the Treasury Board.
This authority will continue until revoked. The delegation of authority dated June 3, 1994, is hereby revoked and replaced.
Done at Richmond, Virginia this tenth day of September, 1999.
Danny M. Payne
Tax Commissioner
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek the correction of a use tax assessment issued to you (the "Taxpayer") for the period September 1996. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer was assessed consumer's use tax on the purchase of furniture from an out-of-state furniture dealer who delivered the furniture to the Taxpayer's Virginia residence. The Taxpayer's husband is currently stationed in Virginia with the United States Coast Guard and expects to be transferred to another state sometime in the year 2000. The Taxpayer maintains that Code of Virginia § 58.1-604 allows the proration of the use tax due on the furniture purchase based on the time the furniture is used in Virginia.
DETERMINATION
Code of Virginia § 58.1-604 imposes a use tax on the use or consumption of tangible personal property in Virginia. Code of Virginia § 58.1-604(1) states in part:
Tangible personal property which has been acquired for use outside this Commonwealth and subsequently becomes subject to the tax. . . shall be taxed on the basis of its cost price if such property is brought within this Commonwealth for use within six months of its acquisition; but if so brought within this Commonwealth six months or more after its acquisition, such property shall be taxed on the basis of the current market value (but not in excess of its cost price) of such property at the time of its first use within this Commonwealth. Such tax shall be based on such proportion of the cost price or current market value as the duration of time of use within this Commonwealth bears to the total useful life of such property (but it shall be presumed in all cases that such property will remain within this Commonwealth for the remainder of its useful life unless convincing evidence is provided to the contrary). (Emphasis added.)
Code of Virginia § 58.1-604 provides for proration of the use tax based on actual usage in Virginia under extremely limited circumstances, i.e., when tangible personal property has been acquired for use outside this Commonwealth and subsequently becomes subject to the Virginia tax. In the Taxpayer's case, the furniture was not acquired for use outside the Commonwealth within the meaning of the statute. In addition, the furniture did not subsequently become subject to the tax. The seller delivered the furniture to the Taxpayer in Virginia. Since the Taxpayer took possession of the furniture in Virginia, first use of the furniture occurred in Virginia and the imposition of the tax was triggered at the moment of first use. The furniture did not become subject to tax after it was used outside this state, as the statute requires.
This position is further substantiated by Title 23 of the Virginia Administrative Code 10-210-6030(D), copy enclosed, which states that "[t]angible personal property purchased for use outside the state but later brought into the state is taxed based on the proportion of the cost price or fair market value as the duration of time of use within this state bears to the total useful life of the property." The enclosed copy of Public Document 88-152 (6/23/88) also illustrates the department's policy.
Based on the facts presented, there is no basis to prorate the Taxpayer's use tax assessment. The balance of the assessment is correct and should be paid within 60 days from the date of this letter to avoid the accrual of additional interest. Payment for the current balance of $**** may be mailed to in the Office of Tax Policy, P. O. Box 1880, Richmond, Virginia 23218-1880. If the payment is not received within the allotted time, an updated bill will be issued to the Taxpayer. If you have any questions regarding this letter, please contact **** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20185S
TO WHOM IT MAY CONCERN
Under the authority of § 58.1-1 of the Code of Virginia, l hereby delegate to Janie E. Bowen, Assistant Tax Commissioner, the authority to sign for me any and all documents, including, but not limited to, affidavits, warrants, rulings, appeals, offers in compromise and sales tax revocations.
This authority shall not extend to matters or documents related to my service on any statutorily created board or commission, including, but not limited to, the Compensation Board and the Treasury Board.
This authority will continue until revoked. The delegation of authority dated June 3, 1994, is hereby revoked and replaced.
Done at Richmond, Virginia this tenth day of September, 1999.
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner