Tax Type
Retail Sales and Use Tax
Description
Deficiency assessments, successor corporation liable for assessment payment
Topic
Collection of Delinquent Tax
Date Issued
11-15-1999
November 15, 1999
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear*******
This is in reply to your letter of October 1, 1999, in which you seek correction of the department's retail sales and use tax audit assessment issued to********** (the "Taxpayer") for the period September 1994 through May 1996.
FACTS
The Taxpayer began its service operations by purchasing ********** a subsidiary of **** , on July 1, 1996. A subsequent audit revealed that tax had not been remitted on purchases made during the audit period (prior to the Taxpayer's acquisition of ********. The Taxpayer was assessed use taxes for that prior period. The Taxpayer contends that any liability rests with the prior owner, and that the department should seek payment from them.
DETERMINATION
Code of Virginia § 58.1-629 provides that:
-
- If any dealer liable for any tax, penalty, or interest levied hereunder sells out his business or stock of goods or quits the business, he shall make a final return and payment within fifteen days after the date of selling or quitting the business. His successors or assigns, if any, shall withhold sufficient of the purchase money to cover the amount of such taxes, penalties, and interest due and unpaid . . . If the purchaser of a business or stock of goods fails to withhold the purchase money as above provided, he shall be personally liable for the payment of the taxes, penalties, and interest due and unpaid on account of the operation of the business by any former owner.
The foregoing provision is directly applicable to this case. The Taxpayer purchased all of the assets and liabilities of *********. Based on the information before me, the Taxpayer did not retain a sufficient amount of the purchase money to cover any potential tax liability. As the Taxpayer is the successor corporation, l find that it is liable for the payment of the assessment. I have enclosed copies of previous rulings, Public Documents 82-143,10/13/82, and 85-132, 06/26/85, which provide additional support for the department's longstanding position. Consequently, the balance of the department's assessment remains due and payable.
Please return your payment for the balance of tax and interest totaling******* to the department’s Office of Tax Policy, Post Office Box 1880, Richmond, Virginia 23218-1880, within 30 days from the date of this letter. If payment is not received within that time, interest will accrue on the balance due from the original date of assessment. 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
OTP/25496Q
Rulings of the Tax Commissioner