Tax Type
Retail Sales and Use Tax
Description
Exemption certificates provided after audit
Topic
Exemptions
Date Issued
12-08-1995
December 8, 1995
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear****************:
This is in response to your letter of August 28, 1995, seeking correction of the sales and use tax assessment to ************* (the "Taxpayer") for the period January 1992 through December 1994.
FACTS
The Taxpayer is a manufacturer of radar, electronic countermeasures, and communications products that are sold to both the government and the defense industry. As a result of the department's audit, an assessment was made for untaxed sales in which the Taxpayer did not have certificates of exemption on file. The Taxpayer takes exception to these sales and maintains that they are exempt sales for resale to government entities.
DETERMINATION
Code of Virginia § 58.1-623 (copy enclosed) provides that "all sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale...of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a certificate to the effect that the property is exempt...." As a precaution, however, Virginia Regulation (VR) 630-10-20 provides that "a certificate that is incomplete, invalid, infirm or inconsistent on its face is never acceptable...." Further, certificates of exemption obtained during or after an audit situation will be accepted only if the department can confirm that the customer's use of the certificate was valid and proper for the specific transaction.
It is my understanding that the Taxpayer has provided the department with a valid certificate of exemption and other documentation with respect to sales held in the audit. Based upon this information, the department finds that the sales in question are exempt. Accordingly, I will remove these items from the audit. Since the sales in question make up both assessments, the total of these assessments will be abated.
If you have any questions regarding this letter, you may contact******** of the department's Office of Tax Policy at*************.
.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10201T
Rulings of the Tax Commissioner