Tax Type
Retail Sales and Use Tax
Description
Occasional sales, including mergers; Corporate merger
Topic
Taxability of Persons and Transactions
Date Issued
12-08-1995
December 8, 1995
Re: § 58.1-1821 Application: Sales and Use Tax
Dear***************:
This will reply to the February 2, 1995 letter seeking correction of the audit assessment issued to ********************(the"Taxpayer").
FACTS
The Taxpayer is an out-of-state manufacturer which formerly operated a sales office in Virginia. An audit for the period September 1993 through November 1994 resulted in an assessment of tax on the sale of certain Virginia tangible assets. The Taxpayer maintains that it merely reorganized to change its legal situs from one state to another pursuant to a plan of merger and that there was no actual sale or transfer of its assets. To support its claim, the Taxpayer recently furnished the department with copies of the actual documents related to its reorganization and merger. Additionally, the Taxpayer maintains that the assessment is erroneous since it involves assets transferred to the Taxpayer one month prior to the Taxpayer's effective date of sales and use tax registration.
DETERMINATION
Liability Prior to Effective Date of Registration:
The department's records indicate that the Taxpayer was registered for (i) use tax effective on October 1, 1993, and (ii) sales tax effective on September 1, 1993, based on information (i.e., the registration application) furnished by the Taxpayer. Furthermore, there is no statutory or regulatory provision which would preclude a taxpayer from becoming subject to sales or use taxation prior to the effective date of its registration when a taxable liability under Virginia law is created. For these reasons, there is no basis to adjust the audit based on the effective date of the Taxpayer's registration.
Occasional Sale:
Code of Virginia § 58.1-609.10(2) provides an exemption from the retail sales and use tax for an "occasional sale" which is defined by § 58.1-602 of the Code as:
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- a sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration.
- a sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration.
If you have any questions concerning this matter, please contact*************of my Office of Tax Policy at****************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9480R
Rulings of the Tax Commissioner