Document Number
98-80
Tax Type
Retail Sales and Use Tax
Description
Recordkeeping requirements; Desktop-generated reports
Topic
Returns/Payments/Records
Date Issued
04-29-1998
April 29, 1998

Dear**********


This is in response to your letter of December 12, 1997, on behalf of ***** (the ``Taxpayer'). You seek a ruling regarding acceptable records for sales and use tax purposes.

FACTS

The Taxpayer is marketing a corporate purchasing card that allows customers (the ``Cardholders') of financial institutions which issue the cards to purchase goods and services from vendors while eliminating the need for vendor-generated invoices. Rather, Cardholders receive a monthly statement from the financial institution that issued the corporate purchasing cards and pay corporate card purchases with one check instead of paying invoices generated by individual vendors. Also, by utilizing the card, Cardholders can make multiple purchases from different vendors without issuing purchase orders.

To alleviate concerns regarding sales or use tax documentation on these paperless transactions, the Taxpayer and the financial institutions have developed desktop software packages that Cardholders can receive. These software packages generate reports detailing transactions handled through the use of the card on the basis of information provided by the Taxpayer, the financial institution issuing the card, and the vendor. Under this system, each vendor will enter all the necessary information through a point of sale terminal or computer submission system. The database associated with the software package will contain the vendor's name, city and state, the Cardholder's name and account number, the transaction amount and the transaction date. This information will be part of the desktop generated reports with respect to each transaction effected with the card. The reports will also allow the Cardholder to identify the sales price of the property, the amount of tax collected, the situs of the sale for tax purposes, and a brief description of the purchase if this information is entered by the vendor at the point of sale.

In most situations, when goods are shipped, the desktop software package can precisely identify the applicable taxing jurisdiction (state, city, and ZIP code). However, in some instances, when only the ZIP code is provided by the vendor, Cardholders may be able to identify the appropriate taxing jurisdiction by using information other than that supplied by the desktop reporting software and the financial institution.

The Taxpayer requests a ruling determining, first, if its desktop reporting software package and the reports it supplies are an acceptable substitute for vendor generated paper invoices. The Taxpayer also inquires if the information it provides to Cardholders identifying taxing jurisdictions is acceptable as accurate.

RULING
    • Code of Virginia Sec. 58.1-633 provides that:

      Every dealer required to make a return and pay or collect any tax under this chapter shall keep and preserve suitable records of the sales, leases, or purchases, as the case may be, taxable under this chapter, and such other books of account as may be necessary to determine the amount of tax due hereunder, and such other pertinent information as may be required by the Tax Commissioner.
Further, Title 23 of the Virginia Administrative Code 10-210-340 [formerly Virginia Regulation 630-10-24] indicates that ``identification of the tax by a separate writing or symbol is not required provided the amount of the tax is shown as a separate item on the record of the transaction.'

I find that the information provided by the Taxpayer to its Cardholders through the reports generated by the desktop reporting software package satisfies these criteria and may be used by Cardholders as an acceptable substitute for paper invoices. This determination assumes that the information provided by the reports is sufficient enough in detail and suitable in form to allow Cardholders and the department to ``determine the amount of tax due' as mandated in the statute.

In regard to precisely identifying the appropriate taxing jurisdiction, the responsibility for doing so rests with the Cardholder. It appears that in most instances the reports generated by the desktop reporting software package provide this information accurately. In those situations where the desktop software package cannot precisely identify the appropriate taxing jurisdiction, the Cardholder may use other information to properly allocate the tax on its untaxed purchases.

Please contact ***** in the Department's Office of Tax Policy at ***** if you have any questions about this letter.



Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46