Tax Type
Retail Sales and Use Tax
Description
Tax on tire disposal fees related to the sale of tires.
Topic
Taxability of Persons and Transactions
Taxable Income
Date Issued
07-21-2011
July 21, 2011
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 for the period January 2007 through December 2008. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer sells and repairs tires. The Taxpayer was assessed sales tax on tire disposal fees related to the sale of tires. The Taxpayer protests the assessment on the basis that it was given the incorrect guidance by the Department when it requested instructions as to the correct application of the tax.
During its initial registration with the Department, the Taxpayer states it was verbally instructed that tire disposal fees were not subject to the tax and did not collect sales tax on the fees based on this guidance. When the Taxpayer was subsequently assessed during the audit for failure to collect sales tax on tire disposal fees, it contacted the Department via "Live Chat". Transcripts of "Live Chat" document the Taxpayer being advised that tire disposal fees are not subject to sales and use tax.
DETERMINATION
Verbal Guidance
Although the Taxpayer argues that the verbal direction given by the Department during its registration was erroneous, it offers no written documentation to support its assertion. Therefore, I am unable to abate the assessment based on this assertion.
Written Guidance
Virginia Code § 58.1-1835 instructs that, "The Tax Commissioner shall abate any portion of any tax, interest, and penalty attributable to erroneous advice furnished to the taxpayer in writing by an employee of the Department acting in his official capacity if:
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- 1. The written advice was reasonably relied upon by the taxpayer and was in response to a specific request by the taxpayer;
2. The portion of the penalty or tax did not result from a failure by the taxpayer to provide adequate or accurate information; and
3. The facts of the case described in the written advice and the request therefor are the same, and the taxpayer's business or personal operations have not changed since the advice was rendered.
- 1. The written advice was reasonably relied upon by the taxpayer and was in response to a specific request by the taxpayer;
The transcripts offered by the Taxpayer during its appeal document guidance provided after the audit period. As such, the Taxpayer could not have relied upon this guidance during the audit period. Therefore, based on the above statute, I find no basis to abate the assessment for this reason.
Additionally, Virginia Tax Bulletin 94-10 (12/1/94) instructs dealers of the requirement to collect sales tax on tire disposal fees when connected to the sale of a tire, regardless of whether the fee is separately stated from the sales price of the tire. As evidenced by the bulletin, the correct written guidance regarding the application of the tax to tire disposal fees was issued by the Department in 1994 and was available to the Taxpayer during the audit period.
According to the Department's records, the assessment has been paid. In accordance with the foregoing statute and tax bulletin, there is no basis to issue a refund.
The Code of Virginia section and tax bulletin cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. If you have any questions about this determination, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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- Craig M. Burns
Tax Commissioner
- Craig M. Burns
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AR/1-4569948823.M
Rulings of the Tax Commissioner