Rulings of the Tax Commissioner

July 20, 2021

Re:  § 58.1-1821 Application:  Retail Sales and Use Tax

Dear *****:

This will respond to your letter submitted on behalf of ***** (the “Taxpayer”), in which you seek a reconsideration of the Tax Commissioner’s determination, issued as Public Document (P.D.) 20-74 (5/5/2020) for the period May 2012 through July 2016.

FACTS

In P.D. 20-74, the Tax Commissioner removed some items from the audit . However, the Taxpayer failed to provide sufficient documentation to warrant removal of the remaining transactions. The Taxpayer requests reconsideration of four issues raised in the original appeal. 

DETERMINATION

With its reconsideration, the Taxpayer provides documentation to support its contention that the assessments are incorrect and that the transactions at issue were properly made exempt of the tax.

In regard to reconsideration requests, Title 23 of the Virginia Administrative Code (VAC) 10-20-165 F 1 permits taxpayers to request a reconsideration of a determination issued under Virginia Code § 58.1-1821. Such requests, however, must meet one of the four following requirements:

1. The facts upon which the original determination is based are misstated by the Tax Commissioner or are inaccurate, and the determination would have a different result based on a correction of the Tax Commissioner's misstatement of the facts presented or a clarification of the original facts presented in the taxpayer's administrative appeal;
2. The law upon which the original determination is based has been changed by legislation, court decision or other authority effective for the tax period(s) at issue;
3. The policy upon which the original determination is based is misapplied, and the determination would have a different result based on the application of the proper policy; or
4. The taxpayer has discovered additional evidence or documentation that was not available to the taxpayer at the time the original administrative appeal was filed with the department, and the additional evidence or documentation could produce a result different from the original determination.

Based upon a review of the documentation provided with the reconsideration request, I find that the documentation does not produce a result different from the original determination as required by the above regulation. The Taxpayer does not provide new documentation or evidence to show that any of the remaining assessed tax is incorrect. The issues are summarized below. 

Untaxed Miscellaneous Charges

For this issue, the Taxpayer provided the same documentation already provided during the appeal. It was stated in the determination letter that this was not sufficient to remove the item from the audit. The Taxpayer fails to demonstrate that the transaction is isolated and not a normal part of the business activity.

***** “Customer 3”

For this transaction, the Taxpayer provides the same invoice provided during the appeal, but submits a supplemental document. The Taxpayer states that the supplemental document shows that the customer was a government entity. Title 23 VAC 10-210-690 A provides the following:

Generally. Sales to the United States, or to the Commonwealth of Virginia or its political subdivisions, are exempt from the tax if the purchases are pursuant to required official purchase orders to be paid out of public funds. Sales made without the required purchase orders and not paid for out of public funds are taxable. Sales to governmental employees for their own consumption or use in carrying out official government business are taxable.

The Taxpayer’s supplemental document does not show that the payment was made directly by the government. In fact, information reviewed during the original appeal states that the customer was reimbursed by the government agency for the purchases. As indicated in P.D. 20-74, businesses that are reimbursed by the federal government do not qualify for sales and use tax exemption. 

***** “Customer 4”

For this transaction, the Taxpayer provides the same incomplete Form ST-10 already provided during the appeal. The determination letter stated that the Taxpayer was given an opportunity to provide the appropriate exemption certificate, Form ST-18, and failed to do so. The Taxpayer does not provide the correct form with the reconsideration request.

***** “Customer 6”

It was determined by the auditor that this transaction was purchased by the organization for its own use. The Taxpayer provides an invoice, but this does not show that the fuel is being given away to indigent persons, as indicated in the determination letter. 

Based on the foregoing, there is no basis to change the prior determination. The assessments are paid in full; therefore, no further action is required. The Code of Virginia and regulation sections cited, along with 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 response, you may contact ***** in the Department’s Office of Tax Policy, Appeals and Rulings, at *****.

Sincerely,

Craig M. Burns
Tax Commissioner

AR/3454.G