Rulings of the Tax Commissioner

November 20, 2000

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


Dear ****

This is in reply to your letter in which you seek a correction of the department's adjustment to the Urban Enterprise Zone (UEZ) refund request submitted by * * * (the "Taxpayer"), for the calendar year 1998. I apologize for the delay in our response.

The Taxpayer is a construction company doing business within a recognized UEZ. During the calendar year 1998, the Taxpayer had expenses directly related to business opportunities within the UEZ. As the program allows, the Taxpayer may apply for a refund of taxes paid as a result of doing business within the UEZ. Upon certification by the Department of Housing and Community Development, the Taxpayer applied to the Department of Taxation for a refund of 100% of the state sales and use taxes incurred during 1998. The department's auditor reviewed the refund request and denied a portion of the refund representing taxes invoiced in 1998, but not paid by the Taxpayer until 1999. The Taxpayer disagrees with the auditor's adjustment and seeks a refund of the disallowed portion totaling * * *.

The Department of Housing and Community Development certifies to the Department of Taxation, on an annual basis, those businesses that qualify for the exemption from the sales tax. The exemption is available to a business for a period not to exceed five years. Accordingly, a refund for those taxes incurred in the final year (1998), is available to a certified business. Based on the information before me, the Taxpayer is such a qualified business within a UEZ, and is eligible for a refund of such taxes.

Accordingly, I have authorized a refund for state sales and use taxes totaling * * *. The refund will also include interest calculated in accordance with Code of Virginia § 58.1-15. If you should have any questions regarding this matter, please contact of the department's Office of Tax Policy at * * *



Danny M. Payne
Tax Commissioner