99-44 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Estate sale; Agent's liability

Topic

Collection of Delinquent Tax

Property Subject to Tax

Date Issued

03-31-1999

March 31, 1999

Re: § 58.1-1821 Application: Retail Sales and Use Tax

Dear**********************

This is in reply to your letter of January 8, 1999, in which you seek a correction of the department's audit relating to certain jewelry sales included in the sales and use tax audit assessment issued to ***** (the "Taxpayer'), for the period June 1995 through August 1998.

FACTS

The Taxpayer operates a retail jewelry store. The department's audit disclosed untaxed sales of customer jewelry (estate sales) and untaxed purchases of supplies and other tangible personal property used in the Taxpayer's business. The Taxpayer contests the assessment of tax on estate sales, stating that in one of its previous audits the Taxpayer was advised that it was acting as an agent, and that such sales were not subject to the tax. The Taxpayer now realizes that such sales are subject to the tax and has corrected its error. The Taxpayer contends that because of the prior advice given, it should not be "penalized' by applying the tax to such sales, and that the sales in question should be removed from the audit.

DETERMINATION

The term "retail sale' is defined in Code of Virginia § 58.1-602 as, "a sale to any person for any purpose other than for resale in the form of tangible personal property or services taxable under this chapter....' Code of Virginia § 58-1-603 imposes the Virginia sales tax upon:

- every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth ... in the amount of three and one-half percent ... of the gross sales price of each item or article of tangible personal property when sold at retail or distributed in this Commonwealth.

Title 23 of the Virginia Administrative Code 10-210-140 sets forth the application of the tax with respect to agents, providing that:

- Auctioneers, agents or factors selling tangible personal property must collect and pay the sales tax on the gross sales price of each taxable sale, regardless of the fact that title to the property sold may rest with another person. "Gross sales price' means the price for which the property is sold without any deduction for commissions, service charges or any other expense. (Emphasis added).
  
  This same section further states that "an auctioneer, factor or agent must collect the tax on all sales including estate sales and similar sales of short duration.' (Emphasis added).

Whether the Taxpayer was an "agent' or not has no bearing on the taxable status of the retail sales, as the Taxpayer was, in fact, making retail sales of tangible personal property. I would also note that the above cited regulation has been in effect in substantially its present form since 1985. It is also published in a comprehensive set of regulations entitled the Virginia Retail Sales and Use Tax Regulations (now the Virginia Administrative Code) which have always been freely available to the public. I further note that the Taxpayer has provided no evidence that it received improper advice from a previous auditor.

Based on the foregoing, and on the basis that the Taxpayer has always operated as a retailer with respect to such sales of jewelry, I do not find sufficient cause to allow any adjustment to the department's audit. Accordingly, the assessment remains due and payable.

Please return your payment for tax, penalty and interest totaling ***** to the department's Office of Tax Policy, Post Office Box 1880, Richmond, Virginia ***** 23218-1880, within 30 days of 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/20675Q

Rulings of the Tax Commissioner