Tax Type
Retail Sales and Use Tax
Description
Audit assessment
Topic
Exemptions
Date Issued
01-25-1982
January 25, 1982
Re: Sales and Use Taxation/58-1118 Application
Dear ***********
This letter is in reply to your letter of September 4, 1981, an application for correction of your assessment of taxes under the Virginia Retail Sales and Use Tax Act for the period July 1, 1975 through April 30, 1981. In this application you contest only that part of the assessment which imposes use tax on materials purchased by the ***********and then distributed to members of **************.
FACTS
******* is a nonprofit organization with members within and without Virginia. Members pay an annual membership fee and receive the following materials from ***** throughout the year: rosters and diaries, directories, badges, booklets, a certificate of membership, record books, calendars, brochures and membership paperweights, pens and briefcases. These items are purchased by and delivered to******* in Virginia without the payment of sales tax. No part of the membership fee is allocated to a particular item.
DETERMINATION
§ 58-441.2(b) of the Virginia Code defines a sale as "any transfer of title or possession, or both, exchange, barter, lease or rental ... of tangible personal property ... for a consideration ...." In the facts at hand, there is no specific charge for any of the items received by members of ***** Rather, there is a fee for membership which entitles one to certain privileges, both intangible and tangible. Therefore, it is the Department's position that ***** distribution of these items to its membership does not constitute a sale or resale as set forth in §58-441.2(c) of the Code. *****is deemed the consumer of these items and then gives them away to its membership. It is noted also that **** makes no claim to have "separately state[d] the amount of the tax and add[ed] such tax to the sales price ..." as mandated by Virginia Code §58-441.18.
Based on the above, use tax was properly assessed on *********** purchases of the items in question. Therefore, your application for correction of the audit assessment is denied. Although you have requested a hearing, it is felt that one will not be necessary unless the facts are different than set out in this determination letter.
However, since the Department's established policy has been to restrict audits of nonprofit organizations to three years, your assessment which is dated August 26, 1981 has been adjusted to reflect this policy. Accordingly, your adjusted tax liability is ***** and covers the period of June 1, 1978 through April 30, 1981. A copy of the revised audit is enclosed.
§58-1130 of the Code of Virginia provides that any taxpayer who has paid an assessment may petition the circuit court for relief within three years of the date of assessment. This date is deemed by §58-1117.20 to be the date the assessment is mailed to the taxpayer. Therefore, should you wish to petition the court for correction of this assessment, you may do so within three years of the date of assessment.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner