Retail Sales and Use Tax
Interstate transactions; Nexus
Taxability of Persons and Transactions
February 19, 1997
Re: § 58.1-1821 Application: Retail Sales and Use Tax
This will reply to your letter in which you seek correction of the retail sales and use tax audit of your client, ********* (the "Taxpayer"), for the period of June 1990 through May 1996.
The taxpayer is a West Virginia company in the retail furniture and appliance business. The Taxpayer was audited and assessed Virginia use tax on sales to Virginia customers. These sales were delivered to the Virginia customer by the Taxpayer's truck. The Taxpayer collected the West Virginia retail sales tax on these Virginia sales and remitted the tax to West Virginia. The Taxpayer made fewer than 12 deliveries per year into Virginia for entire audit period with the exception of 1995. In 1995, the Taxpayer made 17 deliveries into Virginia. The Taxpayer is taking exception to the assessment of Virginia use tax for the years 1990-1995, as the Taxpayer is not required to collect the Virginia tax in accordance with Code of Virginia § 58.1-612.
Code of Virginia § 58.1-612, copy enclosed, defines the term "dealer" for retail sales and use tax purposes. Subsection C of this statute sets forth what activities a dealer must be engaged in to require registration for collection of the Virginia tax. Based on a review of these activities, and information provided by the auditor, the only activity carried on by the Taxpayer to require collection of the tax is delivery of tangible personal property into Virginia by means other than common carrier. Subsection C.4 of this statute provides that the following activity shall be sufficient to require collection of the Virginia tax by the dealer.
- Makes regular deliveries of tangible personal property within this Commonwealth by means other than common carrier. A person shall be deemed to be making regular deliveries hereunder if vehicles other than those operated by a common carrier enter the Commonwealth more than twelve times during a calendar year to deliver goods sold by him.
Based on the information provided in your letter, and verified by the auditor, the Taxpayer did not make more than twelve deliveries into Virginia until calendar year 1995, a year in which 17 deliveries were made to Virginia customers by way of the Taxpayer's truck. This being the case, the Taxpayer did not establish nexus in the state of Virginia until 1995, thus was not required to collect the Virginia use tax until 1995. Due to the fact the Taxpayer did establish nexus with the state of Virginia in 1995, I must deem the tax collected by the Taxpayer from 1995 forward subject to the Virginia use tax. All use tax and interest assessed as the result of the sales and use tax audit prior to 1995 will be abated. A revised notice of assessment will be mailed to the Taxpayer.
If you should have any questions regarding this determination, please contact **************, Office of Tax Policy, at***********.
Danny M. Payne