Document Number
Tax Type
Consumer Use Tax
Estimated Assessment
Date Issued

February 23, 2021

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 March 2014 through February 2020.


The Taxpayer is a real property contractor that performs landscaping and installs patios and pools. During the performance of the Department’s audit, the Taxpayer did not provide the requested records related to purchases. Accordingly, the auditor assessed the use tax based on gross purchases information taken from the Taxpayer’s 2014 through 2018 corporate income tax returns. The Taxpayer contends that it paid sales tax to its vendors on all materials purchased. Accordingly, the Taxpayer requests that the assessments be abated in full.


Virginia Code § 58.1-610 A provides that a person who contracts to perform construction, reconstruction, installation, repair, or any other service with respect to real estate or fixtures thereon and who furnishes tangible personal property is deemed to have purchased the tangible personal property for use or consumption. Title 23 of the Virginia Administrative Code (VAC) 10-210-410 further provides that “the law treats every contractor as the user or of all tangible personal property furnished to him or by him in connection with real property construction, reconstruction, installation, repair, and similar contracts.”  The general contractor policy also applies to landscape contractors such as the Taxpayer. See Public Document (P.D.) 07-171 (11/7/2007). 

It is my understanding that the Taxpayer refused to cooperate with the auditor’s request for records. The Taxpayer indicates in its appeal that it possesses receipts showing that it paid sales tax on its purchases. In order to ascertain whether the sales or use tax was paid on the Taxpayer’s purchases, the auditor must be allowed to review the pertinent records. Until such records are provided, the Department cannot address or consider the Taxpayer’s position. 

The General Provisions in Chapter 1 of Virginia Code 58.1 govern all taxes administered by the Department and provides in Virginia Code § 58.1-102 that: 

It shall be the duty of every taxpayer to retain suitable records and documents substantiating all information contained on any return required by this subtitle and any such other pertinent records or documents as the Tax Commissioner may require by regulation. The records and documents shall be preserved for a period of three years from the required date for filing a return to which such records or documents pertain.

Virginia Code § 58.1-103 further provides that “All records and documents required by this subtitle or by rule or regulation shall be available during regular business hours for inspection by the Tax Commissioner or his duly authorized agents.”  

Chapter 6 of Virginia Code 58.1 specifically addresses the Virginia Retail Sales and Use Tax and requires in Virginia Code § 58.1-633 A that dealers “keep and preserve suitable records of the sales, leases, or purchases, as the case may be, taxable under this chapter, and such other books of account as may be necessary to determine the amount of tax due hereunder, and such other pertinent information as may be required by the Tax Commissioner.”  Title 23 VAC 10-210-470 also provides that the taxpayer is “required to keep and preserve for three years adequate and complete records necessary to determine the amount of tax liability.” 

Pursuant to the cited authorities, the Taxpayer is required to maintain records and to make such records available for review by the Department. In this instance, the Taxpayer did not provide any records for review during the Department’s audit. The assessment was properly issued to the Taxpayer in accordance with Virginia Code § 58.1-618, which authorizes the Department to estimate tax liability in instances when a taxpayer does not provide records for review.

The Tax Commissioner has previously addressed instances in which taxpayers failed to provide records for review by the Department and assessments were estimated based on the best available information. See P.D. 98-4 (1/4/1998), P.D. 16-75 (5/11/2016) and P.D. 18-83 (5/9/2018). 

In addition, the auditor issued the assessment for a six-year period in accordance with Virginia Code § 58.1-634, which addresses the period of limitations and states that:

The taxes imposed by this chapter 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, or a proceeding in court for the collection of such taxes may be begun without assessment, 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.]


Based upon the information presented, the assessment was properly issued. Notwithstanding the foregoing, I am willing to grant the Taxpayer one final opportunity to provide documentation to the Department for review with respect to the audit period at issue. The Taxpayer will be contacted by the appropriate field audit staff to discuss the records and documentation the Taxpayer will be required to provide. The Taxpayer must provide all requested records and documentation to the audit staff within 60 days from the date of contact with the auditor. Once the review is completed by the auditor, revisions to the audit and the audit assessment will be made if warranted. 

Further, the Taxpayer will have 90 days from the date the review is finalized to file an appeal with the Department for any contested issues. Should the Taxpayer fail to provide the records and documentation to the auditor within the allotted timeframe, the assessment will become immediately due and payable at that time, and the Taxpayer will have no further opportunity to submit an appeal in accordance with Virginia Code § 58.1-1821.

The Code of Virginia sections, regulation and public documents cited are available on-line at in the Laws, Rules and Decisions section of the Department’s web site. If you have any questions concerning this determination, you may contact ***** in the Department’s Office of Tax Policy, Appeals and Rulings, at *****.



Craig M. Burns
Tax Commissioner


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Last Updated 04/09/2021 13:58