Tax Type
Retail Sales and Use Tax
Description
Dealers required to separately state the amount of sales tax
Topic
Appropriateness of Audit Methodology
Collection of Tax
Date Issued
11-03-2003
November 3, 2003
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****************:
This will reply to your letter in which you seek correction of a retail sales and use tax audit assessment issued to ***** (the "Taxpayer") for the period February 1998 through November 2000. I note that the uncontested portion of the assessment has been paid. I apologize for the delay in the Department's response.
FACTS
The Taxpayer is a motor vehicle dealership. The Taxpayer was assessed use tax on the purchase of fixed assets for use in its business operations. The Taxpayer indicates that the vendor included Virginia sales tax in the purchase price of the equipment. The Taxpayer contends that it should not be held liable for the tax because it paid the seller with the understanding that the seller was responsible for remittance of all applicable sales tax.
DETERMINATION
Virginia Code § 58.1-625 requires dealers to separately state the amount of sales tax and add the tax to the sales price or charge. Title 23 of the Virginia Administrative Code (VAC) 10-210-340 further provides that "[i]dentification of the tax by a separate writing or symbol is not required provided that the amount of the tax is shown as a separate item on the record of the transaction."
Virginia Code § 58.1-625 also provides that payment of the sales and use tax is a legal obligation of the purchaser. Although dealers are required to collect and remit Virginia sales taxes, the purchaser is ultimately liable for payment of the tax.
In this case, the seller of the equipment indicated that all taxes were included in the written proposal to the Taxpayer. The auditor assessed the tax to the equipment because the Taxpayer could not provide documentation showing that the sales tax was separately stated on the invoice to the Taxpayer. Further, based on the Department's records, the seller of the equipment is not registered to collect Virginia sales and use tax.
Based on the above, the assessment is correct. Therefore, the assessment as shown on the attached schedule is due and payable. It is my understanding that refund money in the amount of ***** was seized through the Department's Debt Set-Off Program and applied to the assessment. The Taxpayer should return its payment for the balance of tax, penalty and interest totaling********** to the Department's Office of Policy and Administration, Appeals and Rulings, Post Office Box 1880, Richmond, Virginia 23218-1880, within 30 days from the date of this letter. If payment is not received within that time, interest will accrue on the outstanding balance, calculated from the date of assessment.
The Code of Virginia sections and regulation cited are available on-line in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us. If you have any questions about this determination, you may contact ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Kenneth W. Thorson
Tax Commissioner
- Kenneth W. Thorson
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AR/39537T
Rulings of the Tax Commissioner