Tax Type
Retail Sales and Use Tax
Description
Occasional sales, including mergers; Restaurants
Topic
Taxability of Persons and Transactions
Date Issued
08-29-1997
August 29, 1997
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear*************
This is in reply to your letter in which you seek correction of a sales and use tax assessment issued to ****** (the Taxpayer) for the period March 1993 through March 1996.
FACTS
The Taxpayer operates as a fast food restaurant chain. As a result of the department's audit, an assessment was made for untaxed purchases. The only issue under protest is the purchase of tangible personal property from ******* (the Seller) for use in the Taxpayer's operation. Based upon the information provided, the Taxpayer purchased eleven restaurants from the Seller, only one of which was located in Virginia. Accordingly, you maintain that the protested purchases represent the sale of all the Seller's Virginia assets and the transaction is an exempt occasional sale.
DETERMINATION
Code of Virginia § 58.1-609.10(2) provides an exemption from the tax for an occasional sale as defined in § 58.1-602. That section defines an "occasional sale" as:
-
A sale of tangible personal property not held in or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration. (Emphasis added)
In the instant case, the Seller's one Virginia restaurant location was sold to the Taxpayer in one transaction, and the sale represented the sale of all or substantially all the assets of the Seller's business in Virginia. As such, the sale qualifies as an exempt occasional sale as defined above.
Based on this determination, the assessment will be revised to remove the contested purchases. A revised assessment will be issued and sent to the Taxpayer as soon as possible.
If you have additional questions regarding this letter, please contact *********in my Office of Tax Policy at***********
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12522T
Rulings of the Tax Commissioner