Tax Type
Retail Sales and Use Tax
Description
Nexus; Dealer defined
Topic
Taxability of Persons and Transactions
Date Issued
02-11-1993
February 11, 1993
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek correction of sales and use tax assessment for **** (the Taxpayer).
FACTS
The Taxpayer a Kentucky corporation is engaged in the sale trucks, truck parts and related items. An audit for the period October 1988 through September 1991 produced an assessment for the Taxpayer's failure to collect the tax on certain sales made to Virginia customers. However, before the audit could be finalized and because the Taxpayer refused to sign a waiver extending the statute of limitations, the department issued an estimated assessment.
The auditors maintain that the Taxpayer is eligible for audit for several reasons, but primarily because (i) it has been registered with the department for the collection of the use tax on sales made to Virginia customers since October 1. 1988; (ii) the Taxpayer utilizes sales personnel in Virginia and (iii) the Taxpayer makes deliveries into Virginia in its own vehicles.
The Taxpayer maintains that it does not have nexus with Virginia and thus is not required to collect the tax on sales to Virginia customers. In addition, the Taxpayer maintains that the assessment is excessive and arbitrary.
DETERMINATION
I will address the Taxpayer's concerns below:
Dealer defined - Va. Code §58.1-612 provides that the sales and use tax shall be collectible from all persons who are dealers. as defined therein, who have sufficient contact with the Commonwealth to require registration for collection of the tax. Subdivision (B)(3) provides that the term "dealer" shall include every person who "[s]ells at retail, or who offers for sale at retail, or has in his possession for sale at retail, or for use, consumption or distribution, or for storage to be used or consumed in Commonwealth, tangible personal property."
The Taxpayer has been making sales to Virginia customers for number of years. In fact, it voluntarily registered with the department and began collecting and remitting the Virginia use as of October 1, 1988. Further, the Taxpayer uses sales personnel to solicit and take orders in Virginia and makes deliveries of tangible personal property to Virginia in its own vehicles. Thus, in spite of the Taxpayer's contention that it is not a "dealer" does meet the definition of "dealer" as defined above.
Reasonableness of assessment - The Taxpayer maintains that department's assessment is excessive and arbitrary and requests that the proposed assessment be set aside as erroneous.
In cases where a dealer does not provide complete information on Virginia transactions, Va. Code §58.1-618 grants the department the authority to issue an estimated assessment, and such assessment is deemed by the statute to be prima facie correct until information to the contrary can be examined. However, I understand that certain records, primarily regarding exempt sales, are currently being reviewed by the Taxpayer and the auditors. When this review is completed, the audit assessment will be revised accordingly.
Collection activity on the assessment has been suspended until such time that the audit is finalized and a revised assessment issued.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6004I
Rulings of the Tax Commissioner