Tax Type
Retail Sales and Use Tax
Description
Exemption Certificates
Topic
Exemptions
Date Issued
10-21-1998
October 21, 1998
Re: Sec. 58.1-1821 Application: Retail Sales and Use Tax
Dear *****
This is in reply to your letter in which you seek a correction of the department's sales and use tax assessment issued to ***** (the ``Taxpayer'), for the period February 1995 through December 1997.
FACTS
The department's audit disclosed that the Taxpayer, who operates a photographic laboratory out of a retail camera shop, sold tangible personal property without receiving a properly completed certificate of exemption. The Taxpayer states that it accepted the exemption certificate in good faith and has provided due diligence under the current sales and use tax laws in receiving such a certificate. The Taxpayer contends that, since the customer did not properly complete the exemption certificate, the department should pursue the customer for the tax. Accordingly, the Taxpayer requests that the department's audit be revised to exclude the particular sale at issue.
DETERMINATION
Code of Virginia Sec. 58.1-623 provides that:
The proper use of certificates of exemption is set out in Title 23 of the Virginia Administrative Code (VAC) 10-210-280 which provides that:
Included within this same regulation, it is specifically provided that ``a certificate that is incomplete, invalid, infirm or inconsistent on its face is never acceptable, either before or after notice.' [Emphasis added.] I note that even after completion of the audit, the Taxpayer was given an additional opportunity to secure a proper and completed certificate of exemption from its customer. As a proper certificate of exemption was not provided, the auditor was correct in including the sale in the audit's calculations. I have enclosed two previous determinations, Public Document (P.D.) 97-351 (08/29/97) and P.D. 98-72 (04/21/98), which further detail the department's policy relating to such certificates.
With regard to the department's collection of the tax from the purchaser rather than the Taxpayer, Code of Virginia Sec. 58.1-612 legally requires the dealer to collect and remit the sales tax on all sales or leases of tangible personal property. While the tax is the legal debt of the purchaser, it is well established that the department may proceed against either the retailer or the purchaser for payment of the tax liability. (See P.D. 88-78, 05/10/88, copy enclosed).
Based on the foregoing, I find no basis to allow for any adjustments to the department's audit. Please return your payment for tax and interest totaling ***** to the department's Office of Tax Policy, Post Office Box 1880, Richmond, Virginia 23218-1880. If payment is not received within 30 days, interest will accrue on the balance due. If you should have any questions regarding this matter, please contact ***** of the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
Re: Sec. 58.1-1821 Application: Retail Sales and Use Tax
Dear *****
This is in reply to your letter in which you seek a correction of the department's sales and use tax assessment issued to ***** (the ``Taxpayer'), for the period February 1995 through December 1997.
FACTS
The department's audit disclosed that the Taxpayer, who operates a photographic laboratory out of a retail camera shop, sold tangible personal property without receiving a properly completed certificate of exemption. The Taxpayer states that it accepted the exemption certificate in good faith and has provided due diligence under the current sales and use tax laws in receiving such a certificate. The Taxpayer contends that, since the customer did not properly complete the exemption certificate, the department should pursue the customer for the tax. Accordingly, the Taxpayer requests that the department's audit be revised to exclude the particular sale at issue.
DETERMINATION
Code of Virginia Sec. 58.1-623 provides that:
-
- All sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale ... of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a certificate to the effect that the property is exempt....
The proper use of certificates of exemption is set out in Title 23 of the Virginia Administrative Code (VAC) 10-210-280 which provides that:
-
- Reasonable care and judgment must be exercised by all concerned to prevent the giving or receiving of false, fraudulent or bad faith exemption certificates. An exemption certificate cannot be used to make a tax-free purchase of any item of tangible personal property not covered by the exact wording of the certificate. [Emphasis added.]
Included within this same regulation, it is specifically provided that ``a certificate that is incomplete, invalid, infirm or inconsistent on its face is never acceptable, either before or after notice.' [Emphasis added.] I note that even after completion of the audit, the Taxpayer was given an additional opportunity to secure a proper and completed certificate of exemption from its customer. As a proper certificate of exemption was not provided, the auditor was correct in including the sale in the audit's calculations. I have enclosed two previous determinations, Public Document (P.D.) 97-351 (08/29/97) and P.D. 98-72 (04/21/98), which further detail the department's policy relating to such certificates.
With regard to the department's collection of the tax from the purchaser rather than the Taxpayer, Code of Virginia Sec. 58.1-612 legally requires the dealer to collect and remit the sales tax on all sales or leases of tangible personal property. While the tax is the legal debt of the purchaser, it is well established that the department may proceed against either the retailer or the purchaser for payment of the tax liability. (See P.D. 88-78, 05/10/88, copy enclosed).
Based on the foregoing, I find no basis to allow for any adjustments to the department's audit. Please return your payment for tax and interest totaling ***** to the department's Office of Tax Policy, Post Office Box 1880, Richmond, Virginia 23218-1880. If payment is not received within 30 days, interest will accrue on the balance due. If you should have any questions regarding this matter, please contact ***** of the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner