Tax Type
Retail Sales and Use Tax
Description
Statute of Limitations; Waiver of Time Limitations; Untimely Assessment
Topic
Collection of Delinquent Tax
Date Issued
04-02-1991
April 2, 1991
Re: §58.1-1821 Application: Sales and Use Tax
Dear***********
This will reply to your letter of January 9, 1991 in which you seek relief from tax and interest assessed and paid by your client ****************(the "Taxpayer").
FACTS
The Taxpayer was audited for the period of January 1, 1987 through November 30, 1989. The Taxpayer signed a waiver of time limitations for assessment which extended the date for assessment to October 31, 1990. However, the assessment was not issued until November 1, 1990, one day after the waiver had expired.
The Taxpayer has paid the audit liability in full. Due to the fact that the assessment was not issued prior to the extended date for assessment, the Taxpayer is seeking a refund of tax and interest for the period of January 1, 1987 through September 30, 1987.
DETERMINATION
For sales and use tax purposes Va. Code §58.1-634 states, in part, "taxes imposed by this chapter shall be assessed within three years from the date on which such taxes became due and payable." In the event that additional time is needed by the department to complete an audit and to issue an assessment for additional taxes, Va. Code §58.1-220 allows the Tax Commissioner and the Taxpayer to agree to extend the time limitation imposed under Va. Code §58.1-634. Taxes in this case were clearly assessed outside the period of limitations extended by the waiver of time limitations. For this reason, a refund for taxes and interest paid, plus accrued interest, for the period of January 1987 through September 1987 will be issued.
For your information, the department's training program for all auditors is structured to avoid this very statute problem. I have taken steps to insure that this will only be an extreme exception in our assessment processes.
If you should have any further questions, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner