Tax Type
Retail Sales and Use Tax
Description
Construction; Improvements to real property
Topic
Taxability of Persons and Transactions
Date Issued
02-26-1997
February 26, 1997
Dear*****************
This is in reply to your letter in which you seek correction of the department's assessment issued to ***** (the "Taxpayer'), for the period November 1993 through July 1995. I apologize for the delay in our response.
FACTS
The Taxpayer was audited and held liable for the untaxed purchases of fixed assets. The Taxpayer states that the purchases are from sub-contractors and that the purchases represent improvements to real property. The Taxpayer has not paid this portion of the department's assessment, as it maintains that the improvements to real property are taxable to the subcontractor, who is providing a service to the Taxpayer. Accordingly, the Taxpayer requests an adjustment of the audit.
DETERMINATION
Code of Virginia Sec. 58.1-205 provides that an assessment by the department is presumed correct. The courts have consistently held that a tax assessment issued by the proper authorities is prima facie correct and valid and that the burden is upon the taxpayer to prove both that the assessment is wrong and the correct amount of the tax liability.
The department's audit disclosed invoices on which tax was not paid. I note that the department's auditor, and more recently a member of my staff, attempted to secure a copy of the contracts relating to the contested measure, for the purpose of verifying the taxable status of the transaction. As the Taxpayer has not presented any verifiable documentation with regard to those requests, I find no basis to revise the assessment. Accordingly, the balance of the department's assessment remains due and payable.
Please return your client's payment for tax and interest totaling***********to the department's Office of Tax Policy, Post Office Box 1880, Richmond, Virginia 232181880, within 30 days. If payment is not received within that time, interest will continue to accrue on the balance due until paid. If you have any questions regarding this matter, please contact ***** of the department's Office of Tax Policy at *****.
Sincerely,
Danny Payne
Tax Commissioner
Rulings of the Tax Commissioner