Tax Type
Corporation Income Tax
Description
Determination of Exempt Status
Topic
Exemptions
Date Issued
03-31-2000
March 31, 2000
Re: Sec. 58.1-1821 Application: Retail Sales and Use Tax
Dear *****
This replies to your letter of January 17, 2000, in which you request that the department reconsider its prior determination regarding the sales and use tax audit assessment issued to your client ***** (the "Taxpayer'), for the audit period May 1995 through March 1998.
FACTS
The Taxpayer is a retailer of trucks and logging equipment. The department's audit disclosed that certain sales of equipment did not include a charge for the sales tax, or that the Taxpayer did not have valid certificates of exemption to support exempt sales. The Taxpayer also contends that it never received a notice of assessment.
DETERMINATION
Retailer
In my prior response, I addressed the issues related to the Taxpayer's retail sales. Code of Virginia Sec. 58.1-602 defines "retail sale' as "a sale to any person for any purpose other than for resale in form of tangible personal property or services taxable under this chapter....' The Taxpayer is a retailer of goods and therefore required to collect the sales tax on all of its retail sales of tangible personal property, unless it has received a complete and valid certificate of exemption from its customers to prove that the purchase is not subject to taxation. In this case, complete and valid exemption certificates did not support exempt sales reported by the Taxpayer. Therefore, the auditor properly assessed tax on such sales.
Notice of Assessment
The Taxpayer contends that it never received a notice of assessment from the Commonwealth. Code of Virginia Sec. 58.1-1820, provides that:
Reexamination
The Taxpayer is a retailer of trucks and logging equipment and not a harvester of forest products. The Taxpayer's sales of equipment to such harvester's did not include the tax, and were not supported with valid certificates of exemption. Accordingly, the Taxpayer is liable for the tax due on the sales at issue. There is no basis to adjust department's assessment.
I also note that the Taxpayer requests an opportunity to make a presentation related to the issues, and to present a videotape of the harvesting process. As explained in my prior correspondence, the law is clear on these issues for all periods prior to July 1, 1999. The fact that equipment is sold to a person in the forest harvesting business does not render the sale exempt. A properly completed exemption certificate must be received from the purchaser to relieve the dealer of liability for collection or payment of the tax. See Code of Virginia Sec. 58.1=623. In this case, it is the Taxpayer's failure to receive and maintain properly completed certificates of exemption which resulted in the assessment of tax. A meeting to review the actual harvesting process would not change the basis for assessment. Thus, this determination relating to the Taxpayer's request for reconsideration is issued without a conference.
The Taxpayer should return its payment for the tax, interest and accrued interest totaling, to the department's Office of Tax Policy, Post Office Box 1880, Richmond, Virginia 23218-1880, within 30 days from the date of this letter. Interest continues to accrue on the balance due from the original date of assessment. Please contact ***** of the department's Office of Tax Policy at ***** if you should have any additional questions.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/26770Q
Re: Sec. 58.1-1821 Application: Retail Sales and Use Tax
Dear *****
This replies to your letter of January 17, 2000, in which you request that the department reconsider its prior determination regarding the sales and use tax audit assessment issued to your client ***** (the "Taxpayer'), for the audit period May 1995 through March 1998.
FACTS
The Taxpayer is a retailer of trucks and logging equipment. The department's audit disclosed that certain sales of equipment did not include a charge for the sales tax, or that the Taxpayer did not have valid certificates of exemption to support exempt sales. The Taxpayer also contends that it never received a notice of assessment.
DETERMINATION
Retailer
In my prior response, I addressed the issues related to the Taxpayer's retail sales. Code of Virginia Sec. 58.1-602 defines "retail sale' as "a sale to any person for any purpose other than for resale in form of tangible personal property or services taxable under this chapter....' The Taxpayer is a retailer of goods and therefore required to collect the sales tax on all of its retail sales of tangible personal property, unless it has received a complete and valid certificate of exemption from its customers to prove that the purchase is not subject to taxation. In this case, complete and valid exemption certificates did not support exempt sales reported by the Taxpayer. Therefore, the auditor properly assessed tax on such sales.
Notice of Assessment
The Taxpayer contends that it never received a notice of assessment from the Commonwealth. Code of Virginia Sec. 58.1-1820, provides that:
- Assessments made by the Department of Taxation shall be deemed to be made when a written notice of assessment is delivered to the taxpayer by an employee of the Department of Taxation, or mailed to the Taxpayer at his last known address.
Reexamination
The Taxpayer is a retailer of trucks and logging equipment and not a harvester of forest products. The Taxpayer's sales of equipment to such harvester's did not include the tax, and were not supported with valid certificates of exemption. Accordingly, the Taxpayer is liable for the tax due on the sales at issue. There is no basis to adjust department's assessment.
I also note that the Taxpayer requests an opportunity to make a presentation related to the issues, and to present a videotape of the harvesting process. As explained in my prior correspondence, the law is clear on these issues for all periods prior to July 1, 1999. The fact that equipment is sold to a person in the forest harvesting business does not render the sale exempt. A properly completed exemption certificate must be received from the purchaser to relieve the dealer of liability for collection or payment of the tax. See Code of Virginia Sec. 58.1=623. In this case, it is the Taxpayer's failure to receive and maintain properly completed certificates of exemption which resulted in the assessment of tax. A meeting to review the actual harvesting process would not change the basis for assessment. Thus, this determination relating to the Taxpayer's request for reconsideration is issued without a conference.
The Taxpayer should return its payment for the tax, interest and accrued interest totaling, to the department's Office of Tax Policy, Post Office Box 1880, Richmond, Virginia 23218-1880, within 30 days from the date of this letter. Interest continues to accrue on the balance due from the original date of assessment. Please contact ***** of the department's Office of Tax Policy at ***** if you should have any additional questions.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/26770Q
Rulings of the Tax Commissioner