Tax Type
Retail Sales and Use Tax
Description
Leases and rentals; Property moved from another state.
Topic
Taxability of Persons and Transactions
Date Issued
12-10-1997
December 10, 1997
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear**************
This will reply to your letter in which you seek correction of a sales and use tax assessment issued to *********** (the "Taxpayer") for the period August 1994 through December 1996. The Taxpayer contests the portion of the audit representing unpaid sales tax on equipment leased within the Commonwealth. In addition, the Taxpayer contests the interest accruing after the due date on the original assessment. The uncontested portion of the audit has been paid.
FACTS
The Taxpayer recently relocated its offices from California to Virginia. Office equipment which the Taxpayer leased while in California was also moved. California sales tax was paid on the equipment leases during the time the Taxpayer was located in that state. After the move to Virginia, the Taxpayer continued to pay California sales tax on the leased equipment, despite the fact that it was no longer located in California. The department's audit disclosed that Virginia tax had not been collected on the lease payments made after the office equipment was moved to the Commonwealth. The Taxpayer contends that the lease payments in Virginia should not be subject to the tax because it continued to pay the California sales tax on these leases.
In addition, the Taxpayer is requesting an abatement of interest accruing on the assessment after the due date because the delay in payment was due in part to the time the department utilized in performing research on other issues which the Taxpayer later decided not to contest.
DETERMINATION
Code of Virginia § 58.1-603 imposes the sales tax on every person who sells or leases or rents tangible personal property in the Commonwealth. Code of Virginia § 58.1-602 defines sale to mean "any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property...." The sale or lease of office equipment constitutes a taxable lease or rental of tangible personal property and is taxable.
The tax imposed by Code of Virginia §§ 58.1-603 and 58.1-604 on the lease of tangible personal property is to be collected by the "dealer" and remitted to the department. The term "dealer" is defined in Code of Virginia § 58.1-612 (B) to include every person who "[i]s the lessee or rentee of tangible personal property and who pays to the owner of such property a consideration for the use or possession of such property without acquiring title thereto." Once the Taxpayer brought the leased office equipment into Virginia, subsequent lease payments to the owner of the equipment became subject to the Virginia tax. The fact that the Taxpayer was incorrectly making tax payments to the state of California would not change the requirement that Virginia tax be paid. l therefore find that the assessment of sales tax in this case is correct.
l note that interest accrued on the uncontested portion of the audit during a time when the department was performing research of issues arising under the audit. The interest accrued from the date of assessment*** will be abated provided full payment of the remaining portion of the asessment*** is made within 45 days. If you have any questions of this matter please contact *** in my Office of Tax Policy at ***** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/13148D
Rulings of the Tax Commissioner