Tax Type
Retail Sales and Use Tax
Description
Beauty salon; Untaxed purchases
Topic
Taxability of Persons and Transactions
Date Issued
04-11-1996
April 11, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear***************
This is in response to your letter of April 17, 1995, in which you seek correction of a sales and use tax assessment to your company **** (the "Taxpayer") for the period January 1992 through December 1994.
FACTS
The Taxpayer, a beauty salon and nail service, was audited and held liable for untaxed purchases used and consumed in its business. The Taxpayer maintains that it was uninformed by the department that it was liable for the use tax on out-of-state purchases delivered to Virginia. In addition, on untaxed Virginia purchases, the Taxpayer argues that the department should hold the Virginia suppliers liable for the tax they failed to charge and collect from the Taxpayer.
DETERMINATION
Virginia Regulation 630-10-109 (A) states that, "The use tax applies to the use...of tangible personal property in Virginia when the Virginia sales or use tax is not paid at the time the property is purchased." This issue is also addressed in P.D. 90--172 (9/21/90), (copy enclosed).
Further, the courts in United states v. Forst, 442f. Supp. 920 (W.D. Va. 1977), 569 F.2d 811 (4th Cir. 1978) mandated that the legal incidence of the sales and use tax is on the purchaser, and although the seller is legally obligated to collect the tax, the tax is a legal debt of the purchaser.
In cases where the seller failed to charge Virginia sales tax, the department can look to the purchaser for payment of the complimentary use tax.
In addressing the issue of being unaware and uninformed in regards to use tax, Code of Virginia § 58.1-204 states that the department is required to publish regulations and written rulings or other interpretations of Virginia law which are of interest to taxpayers and practitioners. The department published regulations in 1966, 1969, 1979, and 1985 which were widely distributed and made freely available to the general public. The regulations provide guidance in the registration of dealers and the application of the tax to sales and purchases of tangible personal property.
While you indicate that you were uninformed about the tax, the foregoing demonstrates that the department has disseminated information on the tax which was readily available to the Taxpayer. Although I am sympathetic to your situation, I find no basis for the correction of the assessment.
You have indicated that the liability resulting from the audit could put an undue hardship on the Taxpayer's business. Based on the circumstances surrounding this case, there is basis for establishing a payment plan to pay the outstanding assessment. I will refer this case to the department's Collections Unit, which will contact the Taxpayer to establish terms of the payment plan.
If you have any questions regarding this determination, please contact** of my Office of Tax Policy at **** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9843T
Rulings of the Tax Commissioner