Tax Type
Retail Sales and Use Tax
Description
Vending machine sales at multiple locations
Topic
Basis of Tax
Computation of Tax
Taxability of Persons and Transactions
Date Issued
08-22-2000
August 22, 2000
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek correction of retail sales and use tax assessments issued to ***** (the "Taxpayer") for the period from April 1993 through March 1999. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer operates car washes at several business locations. Audits of these locations revealed that the Taxpayer was not remitting sales tax on sales made through vending machines owned by the Taxpayer and placed at each business location. The auditor assessed sales tax on gross receipts from vending machine sales. The Taxpayer requests that the department adjust the audit assessments to reflect the inclusion of sales tax in gross receipts from vending machine sales. The Taxpayer also seeks permission to report sales tax on vending machine sales on this basis in the future.
DETERMINATION
Code of Virginia § 58.1-614 (D) provides that when a dealer is able to demonstrate to the satisfaction of the Tax Commissioner that it is impractical to collect the tax in accordance with the bracket system, it may be authorized to compute and remit the tax based on a percentage of gross receipts which takes into account the inclusion of the sales tax.
Based on the circumstances outlined in your letter and under the provisions of Code of Virginia § 58.1-614(D), permission is hereby granted for the Taxpayer to include the tax in the price of items sold through vending machines prospectively from the date of the Taxpayer's letter. The audit assessments will also be recomputed using this method.
Based on the current sales and use tax rate of 4.5%, the Taxpayer should divide the total receipts from vending machine sales for the reporting period (which include sales taxes collected) by a factor of 1.045 to compute the amount of sales tax which must be remitted to the department.
The audit will be adjusted to reflect the inclusion of the tax in gross vending machine sales. I note that the Taxpayer has paid the assessments in full. Refunds will issued to the Taxpayer based on the revised audit liability for each location. If you have any questions concerning this determination, please contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/23263S
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you seek correction of retail sales and use tax assessments issued to ***** (the "Taxpayer") for the period from April 1993 through March 1999. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer operates car washes at several business locations. Audits of these locations revealed that the Taxpayer was not remitting sales tax on sales made through vending machines owned by the Taxpayer and placed at each business location. The auditor assessed sales tax on gross receipts from vending machine sales. The Taxpayer requests that the department adjust the audit assessments to reflect the inclusion of sales tax in gross receipts from vending machine sales. The Taxpayer also seeks permission to report sales tax on vending machine sales on this basis in the future.
DETERMINATION
Code of Virginia § 58.1-614 (D) provides that when a dealer is able to demonstrate to the satisfaction of the Tax Commissioner that it is impractical to collect the tax in accordance with the bracket system, it may be authorized to compute and remit the tax based on a percentage of gross receipts which takes into account the inclusion of the sales tax.
Based on the circumstances outlined in your letter and under the provisions of Code of Virginia § 58.1-614(D), permission is hereby granted for the Taxpayer to include the tax in the price of items sold through vending machines prospectively from the date of the Taxpayer's letter. The audit assessments will also be recomputed using this method.
Based on the current sales and use tax rate of 4.5%, the Taxpayer should divide the total receipts from vending machine sales for the reporting period (which include sales taxes collected) by a factor of 1.045 to compute the amount of sales tax which must be remitted to the department.
The audit will be adjusted to reflect the inclusion of the tax in gross vending machine sales. I note that the Taxpayer has paid the assessments in full. Refunds will issued to the Taxpayer based on the revised audit liability for each location. If you have any questions concerning this determination, please contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/23263S
Rulings of the Tax Commissioner