Tax Type
Retail Sales and Use Tax
Description
Taxation of leased property
Topic
Property Subject to Tax
Date Issued
12-10-2001
December 10, 2001
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****
This is in response to your letter seeking correction of the retail sales and use tax assessment issued to ***** (the "Taxpayer") as a result of an audit. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer is an out-of-state lessor of tangible personal property. An audit for the period April 1994 through July 1997 resulted in use tax assessed on untaxed leases and untaxed late charges made in connection with leases to Virginia customers.
The Taxpayer takes exception to the tax assessed on several leases and other charges. The Taxpayer maintains that such charges are exempt based on the exemption certificates furnished or should be removed from the audit for other reasons.
DETERMINATION
Based on the documentation furnished, I find basis for removing from the audit the charges made to: ***** (listed as "unknown" in the work papers),*****.
As for the remaining item contested, I have addressed that issue below.
The equipment leases included in this audit for this customer were also assessed in the prior audit. It is my understanding that the Taxpayer had received the prior work papers in July 1994 and had started to charge tax on this customer's leases in August 1994. The Taxpayer feels that the inclusion of these leases in the July 1994 sample period would not be a fair representation of the tax deficiencies for the entire audit period.
Generally, a sample will not be revised unless it is clearly shown that the sample is not representative or is flawed in a manner that would invalidate the sample. The courts have held that a tax assessment issued by the proper assessing authorities is prima facie correct and that the burden is upon the taxpayer to prove otherwise. In this case, the Taxpayer has not met this burden.
Although the Taxpayer corrected the tax status on the three leases by August 1994, it is my understanding that the Taxpayer failed to collect any tax on these leases for the period April 1994 through July 1994. Furthermore, the Taxpayer has not shown that other customer leases assessed in the prior audit were all taxed by August 1994 or before. Therefore, I find insufficient basis to remove these leases from the sample.
Conclusion
The audit will be revised in accordance with this determination and the overpaid tax and interest will be refunded as soon as practical. Interest owed the Taxpayer in accordance with Code of Virginia § 58.1-1833 will also be provided.
If you have any questions about the audit revision, please contact ***** Senior Auditor of the department's ***** at If you have any questions regarding this determination, you may contact in the Office of Policy and Administration, Appeals and Rulings, at
Sincerely,
Danny M. Payne
Tax Commissioner
AR/22063R
Rulings of the Tax Commissioner