Document Number
92-108
Tax Type
Retail Sales and Use Tax
Description
Sales or Use Tax Credits; Taxes Paid in Another State
Topic
Credits
Date Issued
06-24-1992
June 24, 1992


Re: §58.1-1821 Application: Sales and Use Tax


Dear******************

This will reply to your letter of April 2, 1991 in which you request a refund of Virginia sales and use tax paid as the result of an audit assessment on************* (the Taxpayer).
FACTS

The Taxpayer is a real estate construction contractor in the business of steel erection and fabrication. The Taxpayer was audited for the period of January 1984 through December 1986. As a result of the audit, the Taxpayer was assessed tax, penalty and interest on November 30, 1987. The audit included the nontaxed purchase of steel and concrete material from a sister corporation located in Maryland for use on a Virginia job. The sister corporation was not registered for the collection of the Virginia tax. The Taxpayer contested the assessment of such taxes on the grounds that the sales tax was included on the purchase order. The Taxpayer's contentions were rejected by letter from the department dated March 31, 1988 and full payment of the audit liability was requested.

On September 22, 1988, as a result of a sales and use tax audit by the state of Maryland, the sister corporation was assessed Maryland sales tax on the items mentioned above which were included in the Virginia audit. On November 15, 1989, it was determined by the Comptroller of the Treasury of the state of Maryland that title to the items held taxable in the Virginia audit actually passed in Maryland and was therefore subject to the Maryland sales and use tax. The Taxpayer is applying for a refund of sales tax paid based upon the provisions of Va. Code §58.1-1827 - Correction of Double Assessments.
DETERMINATION

Va. Code §58.1-1827 addresses the correction of double assessments and states the following:
    • Irrespective of the foregoing provisions, when it is shown to the satisfaction of the court that there has been a double assessment in any case, one of which assessments is proper and the other erroneous, and that a proper single tax has been paid thereon, the court may order that such erroneous assessment be corrected, whether the erroneous tax has been paid or not and even though the application was not made within the period of limitation, as hereinbefore required. (Emphasis added.)
The above referenced section of the Code of Virginia pertains to actions that may be taken by a court, not the Department of Taxation. In addition, the department's position is further supported in the fact that the above referenced Code section is only applicable when a double assessment is issued by the same taxing authority. As previously established, the department has determined that the assessment, with respect to the materials in question, was proper and the tax has been paid.

Regardless of the fact that Va. Code §58.1-1827 is inapplicable to the case at hand, the statute of limitations on refunds expired prior to the time such refund was requested. Virginia Regulation (VR) 630-10-89 dealing with sales and use tax refunds states, in part, the following:
    • A dealer may request a refund for taxes erroneously or illegally collected. The dealer must show that the tax erroneously or illegally collected was paid by him and not passed on to the consumer, or the tax was collected from the consumer as tax and subsequently refunded to the consumer. Refunds cannot be authorized unless the request is made within three years from the due date of the return. (Emphasis added.)
Due to the fact the tax in question was assessed for the periods August through November 1986, the Taxpayer's request for refund filed on January 26, 1991 does not fall within the three year statute of limitations as set forth above.

Had the Taxpayer filed a protective claim for refund with the department when Maryland first asserted its jurisdiction to tax, the Taxpayer could have effectively extended its period for receiving a refund.

Va. Code §58.1-1824 sets forth the provisions for filing a protective claim for refund and states, in part, the following:
    • Any person who has paid an assessment of taxes administered by the Department of Taxation may preserve his judicial remedies by filing a claim for refund with the Tax Commissioner... within three years of the date such tax was assessed.
Based upon the fact that the Taxpayer failed to submit a timely refund claim or protective claim for refund, I find no basis granting the refund request. If you should have any further questions, Please feel free to contact the department.

Sincerely,



W. H. Forst
Tax Commissioner

TPD/5114K

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46