Tax Type
Retail Sales and Use Tax
Description
Use tax; Contractor purchases
Topic
Returns/Payments/Records
Date Issued
01-04-1989
January 4, 1989
Re: 58.1-1821 Application: Sales and Use Tax
Dear *****************
This will reply to your letter dated November 2, 1988, seeking reconsideration of a determination by the department on March 27, 1987, copy enclosed, on the grounds that the department should look to the seller for the tax previously assessed.
As the issues in this matter are clear, I must deny your protective claim for refund. Under Virginia Code § 58.1-1824, the denial of this protective claim will extend the Taxpayer's judicial remedies for a period of one year from the date of this letter. Instead, I will treat this matter as an appeal under Virginia Code § 58.1-1821.
*************** ("The Taxpayer"), states that United States v. Forst, 422 F. Supp. 920 (W.D. Va. 1977), is not relevant to the Taxpayer's case since that case did not pertain to "dealer[s]" under Virginia Code § 58.1-610. We disagree. The court's opinion clearly states that "the legal incidence of the Virginia . . . tax . . . is on the purchaser." United States v. Forst, 442 F. Supp. at 924.
Further, Virginia Retail Sales and Use Tax Regulation § 630-10-109, specifically provides that "[t]he use tax applies to the use, consumption or storage of tangible personal property in Virginia when the Virginia sales or use tax is not paid at the time the property is purchased." (Emphasis added). This regulation has been explicitly validated by the Virginia Supreme Court in Commonwealth of Virginia v. Miller-Morton Company, 220 Va. 852 (1980), copy enclosed, and by the federal court in Forst.
The Taxpayer also contends that Forst indirectly supports its position because certain materials purchased by the contractor in Forst were not taxed. The items at issue in Forst were not taxed because they qualified for the manufacturing exemption under Virginia Code § 58.1-608(1). However, items used in the performance of a contract were held taxable in Forst, as they were in this case. Further, § 58.1-610 of the Code of Virginia clearly imposes the tax upon purchases made by real estate construction contractors such as the Taxpayer.
For the reasons given above and in my March 27, 1987 Determination Letter, I continue to find no basis for the issuance of a refund to the Taxpayer.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner