Tax Type
Retail Sales and Use Tax
Description
Deficiency assessments; Auditor's estimated assessment.
Topic
Collection of Delinquent Tax
Date Issued
01-14-1998
January 14, 1998
Dear*******:
This is in reply to your letter of December 1, 1997, in which you seek correction of the department's assessment issued to ***** (the ``Taxpayer'), for the period April 1994 through August 1996.
FACTS
The department's audit disclosed that the Taxpayer was engaged in the sale of tires, wheels, and other accessories, but failed to file sales tax returns for the periods covered by audit. In 1996, the Taxpayer ceased its retail operations and closed its business. Due to a lack of records the department's auditors utilized other sources of information to estimate sales tax liabilities for certain months. Additionally, sales invoices provided by the Taxpayer were used to establish monthly sales for 1995. The Taxpayer disagrees with the department's assessment.
DETERMINATION
Title 23 of the Virginia Administrative Code (VAC) 10-210-470, copy enclosed, provides, in part, that every dealer liable for the collection and remittance of sales and use tax is required to keep and preserve for at least three years adequate and complete records necessary to determine its sales and use tax liability.
When complete records are not available for inspection and examination by the department in the course of an audit, the auditor must resort to other measures to determine the actual tax liability. In such instances, the department is authorized under Code of Virginia Sec. 58.1-618, copy enclosed, to estimate the tax liability and assess the ***** tax estimated to be unpaid. This statute deems such estimated assessments to be prima facie correct. Accordingly, unless the Taxpayer provides the department with all of the records necessary to make an accurate determination of its actual tax liability, the department may estimate the Taxpayer's liability, and the estimates are deemed correct until proven otherwise.
A review of the audit report reveals that the auditor's methodology used to estimate the Taxpayer's liability is reasonable. Accordingly, the department's assessment is correct as assessed. The Taxpayer should return its payment for the balance of the assessment to the address listed on the department's assessment notice. 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 *****.
Rulings of the Tax Commissioner