Tax Type
Retail Sales and Use Tax
Description
Remittance of tax; Purchaser liable for unpaid tax
Topic
Returns/Payments/Records
Date Issued
07-30-1997
July 30, 1997
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear/*************
This will reply to your letter of May 15, 1997, in which you seek correction of a sales and use tax assessment issued to******** (the "Taxpayer") for the period February 1995 through February 1997.
FACTS
The Taxpayer operates a retirement home. As a result of the department's audit, an assessment was made for untaxed sales and purchases. The only issue being contested is the tax assessed to the purchase of landscape plants.
The Taxpayer contracted with a landscape contractor to furnish and transplant potted plants and to perform other landscape services. The contractor separately stated the materials and labor on the invoice; however, he failed to charge sales tax on the materials. The Taxpayer maintains that the sales tax is included in the price of the materials. In support of its claim, the Taxpayer provides a copy of a revised bill issued by the contractor which gives a break down of the cost of the materials and applicable sales tax. The Taxpayer's contention is that the sales tax has been paid on the invoice in question and to assess the tax again would be double taxation.
DETERMINATION
Title 23 of the Virginia Administrative Code (VAC) 10-210-610 (copy enclosed) provides that the tax applies to the retail sale of shrubbery, sod, and similar items. A person making such sales is required to apply the tax to the total charge, except that separately stated charges for transplanting are not taxable. Code of Virginia § 58.1-625 further provides that a dealer is required to separately state the amount of the tax and add the tax to the sales price or charge. See Public Document 96-277 (10/15/96), copy enclosed.
While Code of Virginia § 58.1-612 requires dealers to collect and remit the sales tax on all sales or leases of tangible personal property, Code of Virginia § 58.1-625 makes the tax the legal debt of the purchaser. This has been recognized by the federal courts, which have held that "the legal incidence of the Virginia sales and use tax is on the purchaser." See United States v. Forst, 442 F. Supp. 920 (W.D. Va.1977), copy enclosed. As such, the department may proceed against either the seller or the purchaser in instances where the tax has not been collected or paid.
I cannot agree with the Taxpayer's contention that the tax has been paid on the materials in question. For instance, the vendor's initial billing did not separately state the tax associated with the tangible personal property sold. While the Taxpayer subsequently provided a revised bill issued by the vendor separately stating the sales tax, the vendor did not hold a certificate of registration authorizing it to collect the tax on its sales.
The Taxpayer also maintains that the auditor accepted, without dispute, other invoices in which the break down of the sales tax was provided subsequent to the audit. I would note that the auditor only removed from the audit those invoices in which the auditor was able to verify that the tax was charged on the invoice and the vendors were registered dealers.
Based on the above, l find no basis for removing the contested item from the audit. Accordingly, as the assessment has been paid in full, l find no basis for a refund.
If you have any further questions regarding this determination, please contact ******at the department's Office of Tax Policy at**************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12567T
Rulings of the Tax Commissioner