Tax Type
Retail Sales and Use Tax
Description
Late payments and audit extensions
Topic
Assessment
Statute of Limitations
Date Issued
07-18-2005
July 18, 2005
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in response to your letter in which you seek correction of the retail sales and use tax assessment issued to ***** (the "Taxpayer"), for the period May 2001 through April 2004.
FACTS
The Taxpayer is a provider of information technology and network solutions in the areas of defense, intelligence and e-government. An audit was conducted by the Department and resulted in the assessment of tax on various elements of the Taxpayer's operations.
The Taxpayer contends the assessment was issued outside the statute of limitations provided under Va. Code § 58.1-634. The Taxpayer notes that the audit period is May 2001 through April 2004, but the assessment was not issued until October 2004. The Taxpayer did not sign a waiver of time limitation for the assessment of taxes. The Taxpayer contends the portion of the sales and use tax assessment associated with May 2001, June 2001, July 2001 and August 2001 should be removed in accordance with Va. Code § 58.1-634.
DETERMINATION
In addressing the statute of limitations for assessing sales and use tax, Va. Code § 58.1-634 provides that the sales and use tax
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- shall be assessed within three years from the date on which such taxes became due and payable. In the case of a false or fraudulent return with intent to evade payment of the taxes imposed by this chapter, or a failure to file a return, the taxes may be assessed . . . at any time within six years from such date. The Tax Commissioner shall not examine any person's records beyond the three-year period of limitations unless he has reasonable evidence of fraud, or reasonable cause to believe that such person was required by law to file a return and failed to do so. [Emphasis added.]
Once it is established that a taxpayer failed to file a return for any month in which a return is due, the audit period may be extended to six years. See Public Document 96-86 (05/09/96). In this instance, the Taxpayer failed to file retail sales and use tax returns for the periods November 2003 through April 2004. Therefore, the auditor was justified in extending the assessment period beyond the three-year statute of limitations.
Based on this determination, the assessment was issued within the applicable statute of limitations and is correct. An updated bill, with interest accrued to date, will be mailed shortly to the Taxpayer. No additional interest will accrue provided the outstanding assessment is paid within thirty days from the date of the updated bill.
The Code of Virginia sections and public document cited, along with other reference documents, are available on-line in the Department's Tax Policy Library, located at www.policylibrary.tax.virginia.gov. 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/53620.i
Rulings of the Tax Commissioner