Tax Type
Retail Sales and Use Tax
Description
Registration requirements for sales and use tax
Topic
Collection of Tax
Date Issued
10-09-1985
-
October 9, 1985
Re: Request for Ruling/Sales and Use Tax
Dear ****
This will reply to your letter of August 9, 1985, in which you request a ruling as to the applicability of the sales and use tax to books sold to schools by *****.
FACTS
***** ("Taxpayer") is engaged in the sale of books to customers both within and without Virginia. The taxpayer maintains no office, sales outlet, or telephone listing in Virginia and does not advertise by radio, television, newspaper, or billboard in the state. The taxpayer states that it has no employees or sales solicitors in Virginia and that it maintains no inventory of books in Virginia.
The taxpayer states that sales are solicited only by telephone from its principal office located outside of Virginia. Deliveries are made either by mail from the principal office or through independent contractors who receive shipments of books in Virginia and deliver them to customers. The taxpayer states that its independent contractors do not handle any payments from customers; rather, such payments are made to the taxpayer's principal office.
The taxpayer requests a ruling to the effect that it is not required to register to collect the sales tax from its customer schools. Alternatively, the taxpayer asserts that it is making nontaxable sales for resale.
RULING
Section 58.1-612.C of the Code of Virginia sets forth the criteria to be used in determining whether a seller has sufficient activity within Virginia to require his registration to collect the Virginia sales tax. Registration is required under the statute when a seller performs any of the following acts:
1. Maintains or has within this State, directly or through an agent or subsidiary, an office, warehouse, or place of business of any nature;
2. Solicits business in this State by employees, independent contractors, agents, or other representatives;
3. Advertises in newspapers or other periodicals printed and published within this State, on billboards or posters located in this State, or through materials distributed in this State by means other than the United States mail: or
4. Makes regular deliveries of tangible personal property within this State by means other than common carrier. A person shall be deemed to be making regular deliveries hereunder if vehicles other than those operated by a common carrier enter this State more than twelve times during a calendar year to deliver goods sold by him.
Based upon the information presented by the taxpayer, I would find statutory basis for requiring the taxpayer to register to collect the Virginia sales tax if it makes deliveries of its goods into Virginia more than twelve times per year by means other than common carrier. Having no evidence that the taxpayer's independent contractors are actually common carriers of goods for hire, I cannot state that delivery to or by such contractors would satisfy the statutory requirement for delivery by a common carrier.
Even if the taxpayer does not make deliveries sufficient in number and scope to require registration, I am advised by the audit staff of our ******** District Office that at least one independent contractor solicits business and maintains an inventory of books for sale in Virginia on behalf of the taxpayer. Accordingly, the taxpayer will be required under the statute to register to collect the Virginia sales tax on all sales to Virginia customers.
While the books sold by the taxpayer may in turn be resold, Virginia Code Section 58.1-623 provides that "[a]ll sales...are subject to the tax until the contrary is established. The burden of proving that a sale...of tangible personal property is not taxable is upon the dealer (in this case the taxpayer) unless he takes from the taxpayer (in this case a school) a certificate to the effect that the property is exempt." When presented with a valid resale exemption certificate by a customer, the taxpayer is relieved from the collection of the tax. For such a certificate to be valid, it must bear the certificate of registration number of the customer. Exemption certificates not bearing the customer's registration number will not relieve the taxpayer of its obligation to collect the tax. While the taxpayer's customers are primarily institutions of learning and political subdivisions of the Commonwealth, which enjoy exemptions from the tax on purchases for their use or consumption, certificates of exemption for institutions of learning or political subdivisions of the Commonwealth may not be accepted by the taxpayer as books that will be resold are not for the use of or consumption by such customers.
Based upon the foregoing, the taxpayer is required to register to collect the Virginia sales tax and to collect the sales tax on all sales in Virginia unless provided with a valid certificate of exemption by a customer.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner