Tax Type
Retail Sales and Use Tax
Description
Occasional sales, including mergers; Sale of automotive oil and lube shop.
Topic
Taxability of Persons and Transactions
Date Issued
03-06-1998
March 6, 1998
Dear***********:
This is in response to your letter in which you seek correction of a sales and use tax assessment issued to ***** (the "Taxpayer') for the period October 1995 through August 1997. I note that the assessment associated with the uncontested issues has been paid.
FACTS
The Taxpayer operates as an automotive oil and lube shop. At the start of its business, it purchased the assets=including furniture, fixtures, and equipment=from the location's former occupant (the "Seller'). The Seller operated two auto oil and lube shops at the time of the sale. Subsequent to the sale, the Seller continued in operation at its second location.
You maintain that the sale of the assets to the Taxpayer is an exempt occasional sale in that the Taxpayer acquired all or substantially all of the assets of the Seller's business. In making this claim you point out that each of the Seller's two locations had separate sales tax account numbers, separate bank accounts, different names, etc.
DETERMINATION
Code of Virginia Sec. 58.1-609.10(2) provides an exemption from the tax for an occasional sale as defined in Sec. 58.1-602. That section defines an "occasional sale' as:
I have reached this same conclusion in numerous rulings and determinations involving similar situations. A representative sample of these are enclosed. Based upon this substantial precedent, the Seller in this case did not sell all or substantially all of its assets. Conversely, see the enclosed Public Document and 94-21 (2/18/94) which addresses an exempt occasional sale transaction in which all or substantially all of the assets of a business were sold.
Based on the information before me, the Taxpayer's nontaxed purchase of assets appears to be correctly assessed. Accordingly, a revised assessment, with interest accrued to date, will be issued to the Taxpayer. No additional interest will accrue provided the assessment is paid within 30 days.
If you have any questions regarding this letter, please contact ***** in the department's Office of Tax Policy at *****.
Dear***********:
This is in response to your letter in which you seek correction of a sales and use tax assessment issued to ***** (the "Taxpayer') for the period October 1995 through August 1997. I note that the assessment associated with the uncontested issues has been paid.
FACTS
The Taxpayer operates as an automotive oil and lube shop. At the start of its business, it purchased the assets=including furniture, fixtures, and equipment=from the location's former occupant (the "Seller'). The Seller operated two auto oil and lube shops at the time of the sale. Subsequent to the sale, the Seller continued in operation at its second location.
You maintain that the sale of the assets to the Taxpayer is an exempt occasional sale in that the Taxpayer acquired all or substantially all of the assets of the Seller's business. In making this claim you point out that each of the Seller's two locations had separate sales tax account numbers, separate bank accounts, different names, etc.
DETERMINATION
Code of Virginia Sec. 58.1-609.10(2) provides an exemption from the tax for an occasional sale as defined in Sec. 58.1-602. That section defines an "occasional sale' as:
-
- A sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration. (Emphasis added.)
- A sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration. (Emphasis added.)
I have reached this same conclusion in numerous rulings and determinations involving similar situations. A representative sample of these are enclosed. Based upon this substantial precedent, the Seller in this case did not sell all or substantially all of its assets. Conversely, see the enclosed Public Document and 94-21 (2/18/94) which addresses an exempt occasional sale transaction in which all or substantially all of the assets of a business were sold.
Based on the information before me, the Taxpayer's nontaxed purchase of assets appears to be correctly assessed. Accordingly, a revised assessment, with interest accrued to date, will be issued to the Taxpayer. No additional interest will accrue provided the assessment is paid within 30 days.
If you have any questions regarding this letter, please contact ***** in the department's Office of Tax Policy at *****.
Rulings of the Tax Commissioner