Tax Type
Corporation Income Tax
Description
Alternative methods; Request for alternative method denied
Topic
Allocation and Apportionment
Date Issued
04-18-1997
March 24, 1997
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear*****************
This is in response to your letter seeking correction of the sales and use tax audit assessment issued to *********** (the Taxpayer).
FACTS
The Taxpayer is a nonprofit organization which is organized to lobby on behalf of its membership. An audit for the period November 1992 through October 1995 resulted in an assessment of use tax on untaxed purchases of tangible personal property.
The Taxpayer takes exception to the tax assessed on merchandise purchased from some out-of-state vendors. The Taxpayer maintains that some goods were picked up by its personnel at the vendor's place of business and were subject to the other state’s sales tax. In other instances, the Taxpayer maintains that out-of-state vendors shipped the goods directly to out-of-state convention sites. For these reasons, the Taxpayer maintains that these items are not subject to the Virginia sales and use tax. The Taxpayer also requests waiver of the interest assessed in this autiit.
DETERMINATION
As required by Code of Virginia § 58.1-633 and 23 VAC 10-210-470 (copies enclosed), the Taxpayer is responsible for maintaining sufficiently adequate and complete records to substantiate its sales and use tax liabilities.
Although you maintain that the Taxpayer used its own driver to pick up merchandise from some out-of-state vendors, you have not provided any evidence to support your claim. In addition, no evidence has been provided for the other contested purchases to show that out-of-state vendors shipped the merchandise directly to locations outside of Virginia and that no use of the property was made in Virginia. In the absence of such evidence, we must rely on the available documents, such as the vendor's invoices which indicate that these items were shipped to the Taxpayer in Virginia. As the statute places the burden of proof upon the Taxpayer to show that the assessment of tax is erroneous, l find no basis for removing these items from the audit.
It is my understanding that the auditor has been in contact with you over the past six weeks to obtain bills of lading or other shipping or vendor documentation in support of your claims. Although you have been unable to provide such documentation, l will allow the Taxpayer one final opportunity to present such evidence to the department. Please send copies of bills of lading or other shipping or vendor documentation related to the contested purchases to the attention of ***** at the department's *********District Office, *************within the next 45 days.
If the requested information is received by the department within the allotted time, the audit will be revised provided such documentation clearly supports the Taxpayer's claims. In case the audit is revised, the Taxpayer will receive a revised bill and audit report. If the requested information is not received by the department within the allotted time, we will assume that it is not forthcoming and will send the Taxpayer an updated bill for the outstanding liabilities.
Of final importance, l would note that the application of interest to tax deficiencies is mandated by Code of Virginia § 58.1-1812. Furthermore, when an assessment is not paid within 30 days of the date of assessment, this statute mandates the accrual of interest at the prescribed rate on the full amount of the initial assessment from the date of assessment until payment is made. Although this is the Taxpayer's first audit, l regret that interest cannot be waived.
If you have any questions about this letter, please contact ***** a member of my tax policy staff, at ********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11007R
Rulings of the Tax Commissioner