Tax Type
Retail Sales and Use Tax
Description
Dealer discount; Timely filed return without payment
Topic
Penalties and Interest
Date Issued
06-06-1985
June 6, 1985
Re: Ruling Request/Sales and Use Tax
Clarification of Retail Sales and Use Tax Regulations
Dear ****
This will reply to your letter of May 13, 1985, requesting a ruling on the correct application of the Virginia Sales and Use Tax Regulations to the following transactions:
1) A merchant files a sales tax return on time but does not enclose payment with the return. Which penalty provisions apply?
2) Does the department automatically disallow dealer's discount and charge a penalty when a timely filed return is not accompanied by payment?
DETERMINATION
The penalty provisions of §58.1-635 of the Virginia Code apply to the circumstances presented in the first transaction described above. That is, the dealer who files a return on time but fails to submit payment on time will be liable for a "specific penalty to be added to the tax in the amount of five percent if the failure is for not more than one month, with an additional five percent for each additional month, or fraction thereof, during which the failure continues, not to exceed twenty-five percent in the aggregate."
Furthermore, §630-1-12(B) of the Virginia General Provisions Regulations applicable to all taxes administered by the Department of Taxation, provides for an additional penalty of twenty-five dollars, where a taxpayer fails to make good any check used to pay the department, within five days after notice of nonpayment by the bank has been mailed by certified or registered mail to such taxpayer. This penalty is in addition to any other penalties imposed for failure to file or pay any tax due and payable to the department, such as those imposed by § 58.1-635 of the Sales and Use Tax Law. Therefore, the merchant described in the first transaction would only become liable for the additional penalty of $25.00 if he submitted payment by check which was returned by a bank for insufficient funds.
It should also be noted that in addition to the $25.00 penalty described above, any person who tenders a check to the department in payment of any sales and use tax liability, which check is returned by a bank unpaid, "shall be guilty of larceny." See § 58.1-637 of the Virginia Code.
In addition, the first part of § 58.1-635 of the Code provides, where "any dealer fails to make any return and pay the full amount of the tax required by this Chapter, there shall be imposed, in addition to other penalties, etc. . . . " (Emphasis added) Furthermore, § 630-10-80 of the Virginia Sales and Use Tax Regulations provides, in pertinent part that "A dealer who fails to file a return and pay the full amount of tax by the required due date is subject to a penalty of five percent (5E0) of the amount due, etc. . . . " [But}, in no case will the penalty be less than $10.00, even if no tax is due for the period." Therefore, the penalty provisions will apply whether the return, the payment or both are not timely filed. (Emphasis added) § 58.1-622 of the Code provides taxpayer a discount equal to three percent (3%,0) of the amount of tax due and accounted for, "in the form of a deduction in submitting his return and paying the amount due by him if the amount due was not delinquent at the time of payment."
Consequently, the dealer discount provision will apply only when there is tax due and accounted for to the department. Inasmuch as the penalty provisions of § 58.1-635 are automatically triggered by the failure to file or pay the tax on time, the dealer discount provisions are similarly self-executing. Therefore, a merchant who fails to file a return or pay the tax on time will be automatically liable for the penalties imposed by §58.1-635 and will be automatically disqualified for the dealer discount provision to the extent that he could have taken such discount had the return and payment been timely filed.
I hope that c all of the above has answered your questions, but please let me know if I can be of further assistance.
Sincerely,
W. H. Forst
Tax Commissioner
Re: Ruling Request/Sales and Use Tax
Clarification of Retail Sales and Use Tax Regulations
Dear ****
This will reply to your letter of May 13, 1985, requesting a ruling on the correct application of the Virginia Sales and Use Tax Regulations to the following transactions:
1) A merchant files a sales tax return on time but does not enclose payment with the return. Which penalty provisions apply?
2) Does the department automatically disallow dealer's discount and charge a penalty when a timely filed return is not accompanied by payment?
DETERMINATION
The penalty provisions of §58.1-635 of the Virginia Code apply to the circumstances presented in the first transaction described above. That is, the dealer who files a return on time but fails to submit payment on time will be liable for a "specific penalty to be added to the tax in the amount of five percent if the failure is for not more than one month, with an additional five percent for each additional month, or fraction thereof, during which the failure continues, not to exceed twenty-five percent in the aggregate."
Furthermore, §630-1-12(B) of the Virginia General Provisions Regulations applicable to all taxes administered by the Department of Taxation, provides for an additional penalty of twenty-five dollars, where a taxpayer fails to make good any check used to pay the department, within five days after notice of nonpayment by the bank has been mailed by certified or registered mail to such taxpayer. This penalty is in addition to any other penalties imposed for failure to file or pay any tax due and payable to the department, such as those imposed by § 58.1-635 of the Sales and Use Tax Law. Therefore, the merchant described in the first transaction would only become liable for the additional penalty of $25.00 if he submitted payment by check which was returned by a bank for insufficient funds.
It should also be noted that in addition to the $25.00 penalty described above, any person who tenders a check to the department in payment of any sales and use tax liability, which check is returned by a bank unpaid, "shall be guilty of larceny." See § 58.1-637 of the Virginia Code.
In addition, the first part of § 58.1-635 of the Code provides, where "any dealer fails to make any return and pay the full amount of the tax required by this Chapter, there shall be imposed, in addition to other penalties, etc. . . . " (Emphasis added) Furthermore, § 630-10-80 of the Virginia Sales and Use Tax Regulations provides, in pertinent part that "A dealer who fails to file a return and pay the full amount of tax by the required due date is subject to a penalty of five percent (5E0) of the amount due, etc. . . . " [But}, in no case will the penalty be less than $10.00, even if no tax is due for the period." Therefore, the penalty provisions will apply whether the return, the payment or both are not timely filed. (Emphasis added) § 58.1-622 of the Code provides taxpayer a discount equal to three percent (3%,0) of the amount of tax due and accounted for, "in the form of a deduction in submitting his return and paying the amount due by him if the amount due was not delinquent at the time of payment."
Consequently, the dealer discount provision will apply only when there is tax due and accounted for to the department. Inasmuch as the penalty provisions of § 58.1-635 are automatically triggered by the failure to file or pay the tax on time, the dealer discount provisions are similarly self-executing. Therefore, a merchant who fails to file a return or pay the tax on time will be automatically liable for the penalties imposed by §58.1-635 and will be automatically disqualified for the dealer discount provision to the extent that he could have taken such discount had the return and payment been timely filed.
I hope that c all of the above has answered your questions, but please let me know if I can be of further assistance.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner