Tax Type
Retail Sales and Use Tax
Description
Liability of corporate officer; Penalties and interest assessments converted to officer
Topic
Collection of Delinquent Tax
Penalties and Interest
Date Issued
04-29-1993
April 29, 1993
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear**************
This will reply to your letter of December 21, 1992 in which you seek correction of sales and use tax assessments on behalf of your clients,*************(the "Taxpayers").
FACTS
One of the Taxpayers was an officer of a corporation. The corporation had numerous assessments for failing to send full payment with their sales and withholding tax returns. Upon failure to collect the deficiencies from the corporation, the department converted the assessments, pursuant to Va. Code §58.1-1813.
You seek correction of the converted assessment by removing the interest and penalty portions. While you admit that the tax is subject to conversion, you contend that there is no provision in Virginia law or regulations that allows corporate penalties and interest to be converted. You cite the Internal Revenue Code and several court cases to support your argument.
DETERMINATION
The department has previously ruled that any penalty or interest imposed against a corporation becomes part of that entity's assessment and is passed on to the responsible corporate officer under Va. Code §58.1-1813, with interest accruing on the total outstanding tax, penalty and interest. See P.D. 92-99 (6/15/92) (copy enclosed).
Also, although not referenced in P.D. 92-99, Va. Code §58.1-1832 very specifically provides that Chapter 18 of Title 58.1 (including Va. Code §58.1-1813) "shall be construed to include taxes, levies, penalties and interest, or all of them. (Emphasis added)
Accordingly, the penalty and interest portions of the converted assessment are correct, and the entire assessment is now due and payable. You will shortly receive an updated bill with interest accrued to date. The bill should be paid within 30 days to avoid the accrual of additional interest.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6614F
Rulings of the Tax Commissioner