Tax Type
Retail Sales and Use Tax
Description
Fabrication of garments
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
11-16-1993
November 16, 1993
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear****************
This will reply to your letters of December 7, 1992 and March 13, 1993 in which you seek correction of a retail sales and use tax assessment for************(the "Taxpayer") for the period January 1989 through December 1991.
FACTS
The Taxpayer is a small tailoring shop, principally engaged in alterations and repairs. Occasionally, the Taxpayer makes garments. The auditor found that the Taxpayer failed to collect tax on fabrication labor and assessed the tax. The Taxpayer protests the tax liability because of lack of sales and use tax information available to taxpayers prior to the audit.
You also request information concerning the submission of an offer in compromise.
DETERMINATION
Availability of information: The department employs various methods to disseminate information concerning the sales and use tax and other taxes it administers.
Under Va. Code §]58.1-204, the department is required to publish regulations and written rulings or other interpretations of Virginia law which are of interest to taxpayers and practitioners. In addition, the department periodically issues tax bulletins to clarify areas of concern or interest. All these documents are available to the public. The department also has several district offices located throughout the Commonwealth to assist taxpayers and provide necessary information. However, under the Virginia sales and use tax regulations, which are mailed to new dealers who register to collect the tax, Virginia
Regulation (VR) 630-10-2 states that it is the responsibility of the taxpayer to request a written ruling from the Tax Commissioner when there is a question about the application of the sales and use tax to a specific situation.
In this case, Virginia Regulation (VR) 630-10-37 is directly on point in addressing the Taxpayer's situation. It provides that:
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- The tax applies to the charges for fabrication of tangible personal property for users or consumers who furnish, either directly or indirectly, the materials used in the fabrication work. For example, a tailor who makes an article of wearing apparel from materials furnished by the customer must collect and pay the tax on the charge for making the apparel.
- The tax applies to the charges for fabrication of tangible personal property for users or consumers who furnish, either directly or indirectly, the materials used in the fabrication work. For example, a tailor who makes an article of wearing apparel from materials furnished by the customer must collect and pay the tax on the charge for making the apparel.
Offer in compromise: Va. Code §58.1-105 authorizes the Tax Commissioner to accept an offer in compromise of taxes if it is determined that the assessment is based upon a doubtful or disputed claim or that the tax liability is of doubtful collectibility. Because the assessment has been paid in full, it is clear that it is not of doubtful collectibility. Furthermore, in this case the application of the law and regulations to the Taxpayer's situation is clear. However, if the Taxpayer wishes to submit an offer in compromise, it should be mailed to the department at P.O. Box 1880, Richmond, Virginia 23282-1880. In accordance with VR 630-1-105 (copy enclosed), the offer must include a complete statement of the reasons for acceptance of the offer.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6957F
Rulings of the Tax Commissioner