Tax Type
Retail Sales and Use Tax
Description
Third party gift transactions; Catalogue and mail order business
Topic
Taxability of Persons and Transactions
Date Issued
05-29-1996
May 29, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear**************
This will reply to your letter of April 22, 1996 in which you request a refund of sales tax and associated interest of ***** (the "Taxpayer") for the period of June 1991 through May 1994.
FACTS
The Taxpayer is in the catalogue sales and mail order business. The Taxpayer was audited and assessed tax on certain third party gift transactions. The 1995 General Assembly passed legislation which exempted third party gift transactions of the nature held taxable in the Taxpayer's audit. The Taxpayer is now requesting a refund of the tax and interest paid on these transactions prior to the law change which became effective July 1, 1995.
DETERMINATION
The area of concern by the Taxpayer is the taxable status of third party nonresident purchases, placed by phone or mail order, and shipped to a nonresident recipient. Prior to July 1, 1995, it was the longstanding policy of the department that third party gift transactions of this nature were subject to the Virginia use tax [See P.D. 90-38 (3/20/90) and P.D. 91-218 (9/13/91) enclosed]. The department's position with respect to these transactions was upheld by the Circuit Court Isle of Wight County in The Smithfield Ham and Products Company, Inc. v. Commonwealth of Virginia, Department of Taxation (Law No. 5127).
As provided above, the audit period in question was June 1991 through May 1994, prior to the law change which took effect on July 1, 1995. For this reason, I find that the audit assessment was proper based on the statute and department policy at that time. The department finds no basis for refunding any payment made by the Taxpayer in satisfaction of the audit liability.
If you should have any questions, please contact ******* , Office of Tax Policy, at****** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11167K
Rulings of the Tax Commissioner