September 9, 2014
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in response to your letter submitted on behalf of ***** (the "Taxpayer") in which you seek correction of the retail sales and use tax assessment issued for the period August 2008 through September 2011. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer is a single member limited liability company incorporated in Virginia. The Taxpayer's principal business activity during the audit period was the sale of pianos. The Taxpayer was assessed tax in the audit on pianos sold to customers without the retail sales and use tax being charged.
The Taxpayer states that during the audit period it entered into a management agreement, dated January 2, 2003, with a management company that contracted to provide management and sales services for the Taxpayer at its location in ***** Virginia. The Taxpayer states that on or about August 2009, one of the owners of the management company registered a company with the Maryland State Department of Assessments and Taxation using the same name as the Taxpayer. The Taxpayer maintains that it was unaware that a similar business using the same name existed in Maryland. The Taxpayer also maintains that it does not have an ownership interest in the Maryland company, and it is a separate legal entity from the Maryland company. Further, the Taxpayer states that it is unaware if the owners of the management company and the Maryland company used any of the Taxpayer's assets or employees to conduct business for the Maryland company. The Taxpayer states that the use of either would have taken place without the knowledge of the Taxpayer's owner.
The Taxpayer contends that the piano sales included in the audit have been incorrectly deemed sales by the Taxpayer, and such sales were made by the Maryland company, a store that is unrelated to the Taxpayer. Accordingly, the Taxpayer requests that the assessment at issue be abated in full.
DETERMINATION
Based upon the information presented, I see no evidence that the Taxpayer and the Maryland company are affiliated entities owned and operated by like owners. The management agreement between the Taxpayer and the management company required that the management company provide management and sales services to the Taxpayer. A notarized statement from the owners of the management company and the Maryland company indicates that ownership of the Taxpayer and the Maryland company is not held by the same persons. Because the Taxpayer and the Maryland company are separate entities, the Taxpayer cannot be held liable for the tax assessed in the audit on sales made by the Maryland company. Accordingly, the assessment at issue will be abated in full.
The Code of Virginia, regulations and other reference documents are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's web site. If you have any questions about this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-5035928219.P