Tax Type
Retail Sales and Use Tax
Description
Dentists; Untaxed purchases; Use tax
Topic
Property Subject to Tax
Date Issued
01-31-1994
January 31, 1994
Re: §58.1-1821 Application: Consumer Use Tax
Dear***************
This will reply to your letter of December 7, 1993 in which you ******* (the "Taxpayer") seek correction of a consumer use tax assessment for the period August 1987 through July 1993.
FACTS
The Taxpayer is engaged in the practice of dentistry. The auditor found that the Taxpayer failed to remit use tax on purchases of tangible personal property used in his practice and assessed tax for a six year period. The Taxpayer has paid the portion of the assessment relating to purchases from January 1990 to July 1993 but protests the portion of the assessment for purchases from August 1987 to December 1989, maintaining he was not made aware of the use tax until 1990.
DETERMINATION
Collection of the use tax is not new. Since the retail sales and use tax was enacted in 1966, the department has audited businesses for use tax compliance. However, 1990 was the first year consumer use tax information was included in the individual income tax packet.
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.
In this case, Virginia Regulation (VR) 630-10-33, adopted January 1, 1985, is directly on point in addressing the Taxpayer's situation. It provides that:
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- Dentists are deemed to be providing professional services and charges for their services are not subject to the tax. Similarly, dentists are deemed to be the consumers of all tangible personal property purchased for use in their practice except controlled drugs which may be purchased exempt from the tax.
VR 630-10-109, published at the same time, set out procedures for payment of the use tax.
As the consumers of tangible personal property, dentists must either pay the sales tax to their supplier at the time of the purchase or remit use tax directly to the department.
It is clear from the regulation that the auditor properly assessed the tax on purchases of tangible personal property by the Taxpayer for use in his practice. The fact that the Taxpayer and his accountant were not aware of the tax or did not obtain the information necessary to fully comply with the Commonwealth's tax laws is not a sufficient ground for the abatement of a valid tax assessment.
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. In this case, the application of the law and regulations to the Taxpayer's situation is clear. However, you maintain that payment of the remainder of the assessment would be a financial hardship. If you wish to submit an offer in compromise, it should be mailed to the department's Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23282-1880. In accordance with VR 630-1-105 (copy enclosed), an offer based on doubtful collectibility must include signed financial statements in sufficient detail to indicate the financial condition of the taxpayer. If an offer and the required financial information is not submitted within 30 days, the department will resume collection action.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/7555F
Rulings of the Tax Commissioner