Tax Type
Retail Sales and Use Tax
Description
Application for refund; Refunds and dealer discounts
Topic
Taxpayers' Remedies
Date Issued
12-06-1996
December 6, 1996
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear
This is in reply to your letter requesting correction of sales and use tax assessed
to********(the "Taxpayer") for the period November 1992 through June 1995. 1 apologize for the delay in responding to your letter.
FACTS
The Taxpayer produces business office furniture and maintains manufacturing and warehousing operations in Virginia. As a result of the audit under review, the Taxpayer was assessed tax on a variety of purchases used in its warehouse operations. The Taxpayer disputes the validity of the sample period and the related error extrapolation. The Taxpayer believes that the sampling method is not representative of the audit period.
Additionally, the Taxpayer takes exception to the fact that it must file a refund request with its vendor in order to recover tax paid in error on exempt purchases. The Taxpayer believes the tax paid erroneously should be credited against its audit liability.
DETERMINATION
Based on the auditor's letter of April 9, 1996 and your recent conversation with a member of my Tax Policy staff, it is my understanding that the sample period has been revised and this issue will be resolved.
Virginia Regulation (VR) 630-10-1820(C)(3) sets forth the requirements for dealers requesting a refund in cases in which the dealer erroneously paid the sales tax. The department prefers to refund the tax through the dealer to prevent misallocations of the 1% local sales tax. With respect to the dealer's discount, Code of Virginia §58.1-1822 limits the amount of a refund to those monies actually paid to the state. Thus, if the dealer or customer makes application for a refund to the department, only the net amount paid to the state can be refunded. For this reason, refunds of this nature are not included as credits in audit findings, and the Taxpayer was properly advised by the auditor to seek refunds from its vendors. I have enclosed copies of the regulation and the statute for your information.
If you have questions concerning this letter, you may contact***********at********. Questions concerning the audit revisions should be directed to**************at**************
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner