Tax Type
Retail Sales and Use Tax
Description
Auditor's assessment prima facie correct
Topic
Collection of Delinquent Tax
Date Issued
02-18-1997
February 18, 1997
Re: § 58.1-1821 Application: Retail Sales & Use Tax
Dear**************
This is in reply to your letter in which you request a correction of the department's audit assessments issued to********** (the "Taxpayer"), for various periods beginning June 1991 through April 1995. I apologize for the delay in our response.
FACTS
During the Taxpayer's operations for the audit periods at issue, the Taxpayer participated in an exchange of properties, treated for income tax purposes as a like kind exchange under Internal Revenue Code § 1031. The department's audit applied tax to furniture, equipment, and start up supplies for two specific locations acquired in the exchange. The Taxpayer contends that the assessments are erroneous in that the assessments have been applied to property received in the exchange, which are not subject to taxation,
In conjunction with the exchange, the Taxpayer also states that the fair market value of the tangible personal property transferred exceeds the measure of tangible personal property subjected to tax in the audit. On this basis, the Taxpayer suggests that a refund is properly due on taxes overpaid as a result of the assets given up in the exchange.
DETERMINATION
Based on a review of the information before me, I am not in agreement that the department's audit imposes the tax on excess assets received in the Taxpayer's like kind exchange. I note that, in the case at hand, the auditor reviewed the Taxpayer's paid bills files and included only that untaxed property acquired by the Taxpayer after conclusion of the exchange agreement. As the Taxpayer's records reflected untaxed purchases unrelated to the exchange agreement, I find that the auditor's assessment was proper.
Code of Virginia § 58.1-205 provides that tax assessments issued by the department are deemed prima facie correct. The burden of proving that an assessment is erroneous is on the taxpayer. In this case, the Taxpayer has not met that burden. If the Taxpayer, however, can provide documentation proving the purchases subjected to the tax were also assets included in the exchange agreement, I will have the auditor review the information and determine if a revision to the department's assessment is warranted. In the absence of such proof, the department's assessment is presumed correct.
With regard to your request for refund, since the purchases at issue are unrelated to the exchange agreement, there is no basis for the allowance of a refund. Accordingly, the balance of the department's assessments are proper and remain due and payable.
Please have the Taxpayer return its check for the balance of the tax, penalty and interest totaling****** to the department's Office of Tax Policy, Post Office Box 1880, Richmond, Virginia 23218-1880, within 60 days. If payment is not received within that time, interest will accrue on the balance due. If you should have any additional questions regarding this matter, or if the Taxpayer wishes to submit additional information as outlined above, please contact********of the department's Office of Tax Policy at**********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10244Q
Rulings of the Tax Commissioner