May 21, 2025
Re: § 58.1-1821 Refund Application: Retail Sales and Use Tax
Dear *****:
This is in response to your letter submitted on behalf of ***** (the “Taxpayer”), in which you request a refund of the Virginia retail sales and use tax paid to Virginia for the period December 2020.
FACTS
The Taxpayer sold tools to two customers through a marketplace facilitator during the taxable period at issue. It completed its out-of-state dealer’s sales and use tax return and remitted use tax for the sales it made to these customers. The ***** (the “Facilitator”) also collected and remitted sales tax for the Taxpayer’s sales to Virginia customers. The Facilitator provided a resale exemption certificate to the Taxpayer. The Taxpayer requested reimbursement from the Facilitator, but it declined.
The Taxpayer submitted a refund claim to the Department requesting a refund of the sales tax it remitted for sales made through the Facilitator. The claim was denied because a complete claim was not filed within the three-year statute of limitations period. Specifically, the Taxpayer failed to include an amended return with the claim. The Taxpayer filed an application for correction with the Department contending that it followed the required procedure for filing a refund claim.
ANALYSIS
Marketplace Facilitators
Virginia Code § 58.1-612.1 D provides that a marketplace facilitator is considered a dealer responsible for collecting the retail sales and use tax on all transactions that it facilitates through its marketplace, and that no marketplace seller should collect the tax on a transaction made through the marketplace facilitator’s marketplace unless the Department grants the marketplace facilitator’s request for a waiver. In addition, Virginia Code § 58.1-612.1 F provides that a marketplace facilitator is the sole entity subject to audit by the Department for sales and use tax collection for all transactions facilitated by the marketplace facilitator unless (i) the failure is the result of incorrect information provided by the marketplace seller, or (ii) the marketplace seller is subject to a waiver issued by the Department under Virginia Code § 58.1-612.1 D. In this case, the Facilitator properly collected and remitted sales tax and subsequently declined to refund the tax to the Taxpayer.
Refund Procedures
The Retail Sales and Use Tax Refund Claim Procedures (the “Procedures”), which are available on the Department’s website, outline the procedures for purchasers and dealers to request refunds from the Department when sales or use tax has been collected and/or remitted in error on exempt transactions. The three methods taxpayers may use to recover sales taxes remitted in error are: (1) take a credit on the sales and used tax return for the month in which the error is discovered or corrected; (2) file an amended return for the period(s); or (3) file a refund claim in accordance with the procedures.
The Department denied the refund request because the Taxpayer did not include an amended return with its refund claim. The Taxpayer contends that it satisfied the refund request requirements because it filed a refund claimant return, refund request spreadsheet, Virginia power of attorney, copy of its out-of-state dealer return (Form ST-8), and copy of a resale exemption certificate issued by the Facilitator.
Under the Procedures, when a dealer cannot recover the amount of tax paid to the Department on its return for the month in which the error is recognized or in the next succeeding period, it must file an amended return with the Department to seek a refund. Once the amended return is received, it may be referred to the Department’s Refund Review Unit for review. If the Department refers the claim to the refund unit, the dealer would be required to complete a Vendor Certification Form, Refund Claimant Return, and Refund Request Spreadsheet and maintain these in their records to support any credit taken.
While the Taxpayer’s refund claim provided a copy of the Form ST-8 along with the Vendor Certification Form, Refund Claimant Return, and Refund Request Spreadsheet, an amended return was not included. As such, the refund claim was incomplete.
Statute of Limitations for Refund Claims
Virginia Code § 58.1-1823 provides that anyone who files a tax return or pays an assessment required for any tax administered by the Department may file an amended return within three years from the last day prescribed by law for the timely filing of the return. Title 23 of the Virginia Administrative Code (VAC) 10-210-3040 further provides guidance for dealers to request a refund for taxes erroneously collected, emphasizing that a refund may only be authorized if the request is made within three years from the due date of the return.
Virginia Code § 58.1-615 A provides, in pertinent part, that “every dealer required to collect or pay the sales or use tax” must file a return “on or before the twentieth day of the month following the month in which the sales tax shall become effective.” The due date of the Form ST-8 was the 20th day in the month following the end of the taxable period. For the period in question, the claim for a refund was required to be filed by January 22, 2024 (January 20, 2024 was a Saturday). The refund claim was filed on January 22, 2024, the last day in which to claim a refund.
The Procedures state that “[f]or purposes of satisfying the three-year statute of limitations, an incomplete Refund Claimant Return is not sufficient.” The statute of limitation periods for sales and use tax refunds are strictly adhered to by the Department. As stated above, the Taxpayer’s refund claim was incomplete because it did not provide an amended return. The Procedures provide that the Department will notify taxpayers that information is missing and allow 60 days to provide the missing information. In Public Document (P.D.) 23-77 (7/6/2023) and P.D 23-129 (12/7/2023), the Department disallowed refund claims where the Department had requested additional information. In both cases, the claimants failed to respond to the request and the Department issued rejection letters prompting the claimants to file corrected refund requests beyond the statute of limitations.
Because the Taxpayer in this case filed its refund claim on the last day of the limitations period, it would not have been possible for the Department to request and receive from the Taxpayer the required returns before the claim’s statute expired. Allowing an additional 60 days to provide the required documentation in this case would in essence be extending the statutory three-year limitations period by an additional 60 days.
DETERMINATION
Accordingly, because the Taxpayer did not file a complete refund claim within the three-year limitations period, the request for a refund of sales tax remitted for the period at issue cannot be granted.
The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy and Legal Affairs, Adjudication and Resolution Division, at ***** or *****@tax.virginia.gov.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/4869.B