Tax Type
Retail Sales and Use Tax
Description
The effective date of the nonprofit exemption would be the date the letter is issued
Topic
Exemptions
Date Issued
02-14-2006
February 14, 2006
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in reply to your letter in which you seek correction of the Department’s retail sales and use tax audit assessment issued to ***** (the “Taxpayer”) for the period April 2002 through December 2004. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer is a retailer of lawn and garden equipment. During the audit period, the Taxpayer sold equipment to a nonprofit entity and did not charge sales tax. An audit of the Taxpayer’s records found no evidence of the nonprofit entity giving or the Taxpayer accepting a certificate or letter of exemption issued by the Department. Accordingly, the auditor assessed the tax on the sale. The Taxpayer contends that the nonprofit entity is exempt from the tax and states that the entity has since filed an application for exempt status with the Department.
DETERMINATION
Pursuant to Va. Code § 58.1-623, all sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale, distribution, lease, or storage of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a certificate to the effect that the property is exempt. Because the Taxpayer did not receive an exemption certificate in connection with the sale at issue, the auditor properly assessed tax on the transaction.
Even if the nonprofit entity were issued an exemption letter from the Department, the effective date of the exemption would be the date the letter is issued. Accordingly, the exemption letter may not be used for purchases made prior to the effective date noted in the exemption letter. Consequently, the sale at issue is not and cannot become exempt from the tax.
Based on the foregoing, the assessment is correct. An updated bill, with interest accrued to date, will be sent to the Taxpayer. No additional interest will accrue provided the outstanding balance as shown on the updated bill is paid within 30 days from the date of the bill.
The Code of Virginia section cited is available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department’s website. If you have any questions regarding this determination, please contact ***** of the Department’s Office of Policy and Administration, Appeals and Rulings, at *****@tax.virginia.gov or at *****.
Sincerely,
Kenneth W. Thorson
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- Tax Commissioner
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AR/55502Q
Rulings of the Tax Commissioner