Tax Type
Retail Sales and Use Tax
Description
Exemption certificates
Topic
Exemptions
Date Issued
07-29-1985
July 29, 1985
Dear ****
This will reply to your letters of August 3, August 27, and August 30, 1984 in which you submit applications for correction of sales and use tax assessed to * * * as the result of a recent audit.
FACTS
* * * (hereinafter "Taxpayer') is engaged as a distributor of snack food products. The taxpayer primarily distributes goods to independent subdistributors who resell the goods to residential customers along designated routes. The subdistributors by agreement are required to obtain all required licenses and permits and to indemnify the taxpayer from losses connected with a subdistributor's breach of the agreement or negligence by or on behalf of a subdistributor. In addition, the taxpayer makes some retail sales of its own on certain delivery routes which it wishes to develop.
An audit of the taxpayer revealed a failure to collect the sales and use tax on sales to subdistributors who were not registered to collect the sales tax. The taxpayer contests such assessment, asserting that it made exempt sales for resale to its subdistributors and that the responsibility for any tax rests with its subdistributors.
DETERMINATION
Section 58.1-602.14 of the Code of Virginia defines the term "retail sale' as "a sale to any person for any purpose other than for resale. As the sales tax is imposed in Virginia Code Section 58.1-603 "upon every person who engages in the business of selling at retail', sales for resale are in effect exempted from the tax. However, Virginia Code Section 58.1-623 specifically provides the following:
W. H. Forst
Tax Commissioner
Dear ****
This will reply to your letters of August 3, August 27, and August 30, 1984 in which you submit applications for correction of sales and use tax assessed to * * * as the result of a recent audit.
FACTS
* * * (hereinafter "Taxpayer') is engaged as a distributor of snack food products. The taxpayer primarily distributes goods to independent subdistributors who resell the goods to residential customers along designated routes. The subdistributors by agreement are required to obtain all required licenses and permits and to indemnify the taxpayer from losses connected with a subdistributor's breach of the agreement or negligence by or on behalf of a subdistributor. In addition, the taxpayer makes some retail sales of its own on certain delivery routes which it wishes to develop.
An audit of the taxpayer revealed a failure to collect the sales and use tax on sales to subdistributors who were not registered to collect the sales tax. The taxpayer contests such assessment, asserting that it made exempt sales for resale to its subdistributors and that the responsibility for any tax rests with its subdistributors.
DETERMINATION
Section 58.1-602.14 of the Code of Virginia defines the term "retail sale' as "a sale to any person for any purpose other than for resale. As the sales tax is imposed in Virginia Code Section 58.1-603 "upon every person who engages in the business of selling at retail', sales for resale are in effect exempted from the tax. However, Virginia Code Section 58.1-623 specifically provides the following:
- All sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale, distribution, lease, or storage of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a certificate to the effect that the property is exempt . . .
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner