Tax Type
Retail Sales and Use Tax
Description
Motor Vehicle Registration
Topic
Collection of Delinquent Tax
Date Issued
07-21-1966
This is in reply to your letter of June 14, 1966, in which you present a series of questions pertaining to Chapter 12.1, Title 58 of the Code, relating to ``Virginia Motor Vehicle Sales and Use Tax Act.'
[Questions and answers]
I shall state your questions and answer the same in the order set forth in your letter.
"(1) When the reported sale price of a used vehicle represents a sum insufficient, in the judgment of the Commissioner, to pay the Sales or Use Tax prescribed by this Chapter, based on information obtained from industry publications, National Market Reports of Used Car Valuation applicable at that time, and other sources of information or data which are customarily employed in ascertaining the maximum sale price of such used motor vehicles, can the Commissioner apply § 58-685.17 to estimate the tax due, or is he bound by the statement of the applicant for title that such sale price is in fact the true amount upon which the tax should be computed? In sales between individuals, where no dealer is involved, is the applicant's statement on the title application as to the amount of sale price sufficient to assess and collect the tax, or should the values from the above mentioned publications be considered as governing such transactions?'
In all transactions, the tax is based upon the actual sale price of the motor vehicle. In § 58-685.11(6), sale price is defined as follows:
"'Sale price' shall mean the total price paid for a motor vehicle and all attachments thereon and accessories thereto, without any allowance or deduction for trade-ins or unpaid liens or encumbrances, but exclusive of any federal manufacturer's excise tax.'
Subsections (a) and (b) of § 58-685.12 provide that the tax shall be 2% of the sale price.
The provisions of § 58-685.17 apply only in cases where no sale price is stated or in the judgment of the Commissioner the person applying for a certificate of title has not disclosed the actual sale price. The value of a motor vehicle as shown by the various publications mentioned in this question is a basis for assessment of tax. If the value is substantially in excess of the reported sale price it may justify the Commissioner in requesting an explanation or further verification from the applicant. If the applicant refuses to disclose the sale price an assessment may be made under § 58-685.17 based upon the published value of the automobile. Of course, the purchaser of the car may dispute the accuracy of the assessment and may defend the same in court by producing evidence to support his statement.
"(2) On the sale of new cars, is the separate charge for transportation to be subject to the Tax?'
There is no provision in the Act with respect to this matter. If the separate charge for transportation is part of the total sale price paid for the automobile, it is taxable.
"(3) When the vehicle is owned by an individual who seeks to establish joint ownership with another by adding one or more names, does the Tax apply? Where a vehicle is owned jointly and one or more of the registered owners are to be dropped from the title certificate, does the Tax apply? In the preceding two situations, please consider, also, the problem relating to vehicles purchased on and after September 1, upon which tax was originally collected; and those vehicles owned prior to September 1, for which no tax has been applicable. If the tax applies on transactions where joint ownership is established in lieu of the former ownership by a single individual, is the tax assessed on the basis of the full sale price of the vehicle at that time, or on one-half of the sale price or other applicable fraction thereof in proportion to the number of names added to the ownership of record?'
In the cases cited in this question, the tax will be based upon the consideration paid. If there is no consideration passing between the parties, there will be no tax. For example, if a husband desires to title the property in the joint ownership of himself and his wife, unless the wife is making payment to the husband, there is no tax. Furthermore, if a car owner makes a gift of a motor vehicle to any person, there is no tax upon the transaction.
"(4) a. When there is a change of name of a corporation, company, partnership or individual trading as a specific name, which results in retitling of a motor vehicle in the new name, does the Tax apply to such transaction?
"(4) b. When such retitling is necessitated by a change of name only and does not involve a change in the ownership or possession of the vehicle, does the Tax apply?'
The answers to both of these questions are in the negative unless there is a sale for a consideration.
"(5) a. If a nonresident serviceman stationed in Virginia, as a result of military or naval orders, or who is absent from his state of domicile under these same orders, elects to register and license his vehicle in Virginia, is he then subject to the Tax in addition to the title fee and the license plate fee?
"(5) b. Under those same circumstances, would the fact that the automobile is owned jointly by the serviceman and his spouse or another in the armed services, does the Tax apply, and if so, is it applicable in full or in proportion to the joint ownership thus presented?'
(a) In my letter of April 14, 1966, to the Commonwealth's attorney for Essex County and on several other recent occasions, I expressed the opinion that a revenue raising tax may not be enforced against a nonresident serviceman stationed in Virginia by reason of military or naval orders. This interpretation of the Soldiers' and Sailors' Civil Relief Act was expressed by the United States Supreme Court in the case of California v. Buzard, 15 L. ed. 2d. 436, decided January 18, 1966. The court further concluded that, under this Act, only those taxes which are essential to the functioning of the host State's licensing and registration laws are applicable to the motor vehicles of nonresident servicemen. It is my opinion, therefore, that this tax may not be imposed on nonresident servicemen, and I shall answer your question in the negative.
(b) You seem to raise two questions, one relating to joint ownership by servicemen and the other relating to joint ownership by a serviceman and his wife. My answer to Question 3(a) would be the same as to joint ownership between two nonresident servicemen. A resident serviceman has no immunity under the Soldiers' and Sailors' Civil Relief Act. In the case of husband and wife, unless the wife makes payment for her interest in the vehicle, there is no tax. If the wife does make payment for such interest, the tax will be based upon the consideration paid, less any applicable credit for tax paid another State.
"(6) a. In light of the language contained in §§. 58-685.12 and 58-685.14 in those cases when a motor vehicle is illegally used in Virginia by virtue of the owner not applying for title and license and is thereafter removed from the jurisdiction, junked or skiptitled, is the owner who is in violation of the titling requirements subject to assessment of the Tax?
"(6) b. If this is answered in the affirmative, is the value of such motor vehicle controlled by the price and value of the vehicle at the time such vehicle began its illegal operation or will the tax be ascertained based on the value at the time of apprehension and subsequent application for title and license?'
The answer to subsection (a) of this question is in the negative. It is assumed that you have reference to situations involving a violation of the provisions of § 46.1-64 subject to the penalties prescribed for such violation. The Act under consideration here does not provide for a titling tax in such cases.
Inasmuch as I have answered 6(a) in the negative, no answer is required to your question 6(b).
"(7) Does the applicant's statement on the title application that a 1966 model vehicle was purchased new out of the state or country, control the exemption in § 58-685.12(b)?'Unless the applicant has made a false statement on the title application such statement will apply and entitle the person to the exemption referred to therein.
"(8) Is a homemade trailer for which application is made after September 1, 1966, exempt from the tax under § 58-685.12(b), as a new vehicle?'
Assuming that a person applying for title is the person who built the trailer, the answer to this question is yes. Any such homemade trailer is exempt from the tax levied and imposed under § 58-685.12(b). Separate parts purchased for a motor vehicle or trailer are taxed under the "Virginia Retail Sales and Use Tax Act,' Chapter 8.1 of Title 58, Code of Virginia (1950), as amended, enacted by Chapter 151, Acts of Assembly of 1966, and found in Chapter 8.1 of Title 58, Code of Virginia (1950), as amended.
"(9) Are vehicles leased to the United States or local government, which are subject to title and license, exempt from the Tax when such lease terminates or expires and such vehicle is then leased to a private person?'
The exemption found in § 58-685.13 as to motor vehicles sold to or used by the United States or its governmental agencies or the State of Virginia or its political subdivision no longer applies when such ownership or use terminates. I shall, therefore, answer this question in the negative.
"(10) Are vehicles title by Consuls or Diplomatic Officers who are exempt from payment of annual registration fees, subject to this tax? (These vehicles are currently subject to Virginia Title Fees.)'
There appears no provision in the Act to exempt vehicles by consular or diplomatic officers and accordingly, I shall answer this question in the affirmative.
"(11) In cases of nonresidents first titling vehicles in Virginia where no previous sales tax has been paid, does the Division impose the tax on the basis of the market values at the time Virginia application for title is made, or on the basis of the original sale price of the vehicle?'
The tax imposed in this case would be based upon the sale price of the vehicle, but not on those purchased prior to September 1, 1966.
"(12) When application for Virginia title is made after September 1, 1966, is the applicant's statement that such sale was consummated prior to that date sufficient to exempt this sale from the Tax? If so, how long after September 1, should such exemption be granted on this statement that the sale was consummated prior to the effective date of the Tax Act?'
This question is in two parts. The answer to the first part depends upon whether or not the statement is true. If you have reason to doubt the truth of the statement, you may call for supporting evidence. There is no limitation of time, with respect to the second part of your question.
"(13) When the Commissioner estimates and assesses tax because of an insufficient sum submitted under § 58-685.17, may he then retain and/or cancel the aforementioned title, if sufficient tax is not collected; (a) as to the owner of the vehicle; (b) as to the lienholder of record shown on the application?'
This question is answered in the negative with respect to (a) and (b). There is no provision in the statute for the cancellation of the title; however, the Commissioner may withhold the issuance of a title until satisfactory payment of the tax is made.
"(14) What is the jurisdiction of legal action for the Division to institute suit for collection of unpaid tax?'
The jurisdiction for any such action is not prescribed in the Act under consideration and in my opinion, therefore, is controlled by the laws generally applicable for the collection of taxes by suit. Any such action under Article 9, Chapter 20, Title 58, Code of Virginia (1950), as amended, shall be instituted in the appropriate court of the county or city wherein the taxes are assessed or payable or wherein the person against whom they are assessed resides. In the case of Commonwealth v. Ford, 29 Gratt (70 Va.) 683, the court held that unless otherwise especially provided the State may sue in any of the courts in which other parties may prosecute suits of like character.
"(15) Is the tax applicable when transfer of ownership on the title certificate is directed as a result of a Court Decree, or inheritance either by will or descent and distribution, or in cases of bankruptcy orders, divorces, legal separations, dissolving of partnerships, or other transfers of ownership by operation of law?'
The answer to this question depends upon the sale price of the automobile. If the new owner was not required to pay anything for the automobile, it is not subject to tax.
"(16) What evidence must be required and retained by the Commissioner to grant exemption allowed under § 58-685.20 so that a complete and proper record of tax transactions can be available for inspection by the Auditor of Public Accounts?'
The Act makes no specific requirement as to evidence of this nature but gears the credit to the tax paid by the user to another state by reason of the imposition of a similar tax on or for purchase or use of the property. A receipt or statement or other acceptable data furnished by the state or the vendor to which the tax was allegedly paid should be required and retained by your office for auditing purposes. This evidence should be submitted by the applicant.
"(17) Who assumes the expense of any audit required by § 58-685.12(c) relating to certain common carriers of passengers? In this connection, should the audit only consider those vehicles used both within and without Virginia as in § 46.1-149 (5a)?'
In regard to the first question, no specific provision for audit or bearing the expense thereof is made in this section. It states, however, that the Commissioner may require such evidence of the total number of vehicles and the miles travelled by all such vehicles as he deems appropriate. If there be instances in which such evidence may be obtained from a common carrier only by audit, I am of the opinion that such carrier should bear the cost of the required audit. It would appear that the audit made pursuant to § 46.1-149, paragraph 5(a) would suffice in instances in which licensed under that section. In regard to the second question here, paragraph (c) of § 58-685.12 applies only to motor vehicles used by common carriers of passengers within and without the State and I shall answer this question in the affirmative.
"(18) a. Is a vehicle purchased in one of the ten non-title states, or foreign countries, subject to the tax when the dealer makes application for a Virginia Title in order that he may sell the vehicle in Virginia?
"(18) b. If a dealer titles a vehicle in his name for the purpose of recording a lien, is the tax applicable even though such dealer retains ownership and possession, and the vehicle is a part of his inventory offered for sale?'
(a) The application by a dealer for a Virginia title in a situation such as you describe does not represent a sale as defined in paragraph (3) of § 58-685.11 since neither ownership or possession is thereby transferred. I shall, therefore, answer this question in the negative.
(b) Likewise excluded is a situation in which the dealer titles a vehicle in his name for the purpose of recording a lien while he retains ownership and possession and such vehicle remains a part of his inventory offered for sale. Accordingly, I shall also answer this question in the negative.
"(19) Can vehicles exempted from license plates under § 46.1-45 and excluded from the definition of a motor vehicle under § 38-685.11 (3), obtain a title by paying only the title fee, where license plates are not required to be purchased nor actually purchased? If so, should the owner subsequently decide to operate such vehicle for highway use and subsequently purchase his license plates for the vehicle, does the tax then apply? If so, is the value of the vehicle in question that value at the time title was obtained, or the later moment in time when the vehicle was subsequently licensed and utilized for highway use?'
The exemption from the requirement for obtaining annual registration certificate and license plates or paying a fee therefor found in § 46.1-45, Code of Virginia (1950), as amended, makes no reference to the procurement of title. Vehicles "not required to be licensed by the State' are exempt from the tax imposed by Chapter 587, Acts of Assembly of 1966. I find no requirement that every vehicle titled must be licensed, except when it is to be operated, upon the highway. I am of the opinion that titles may be obtained for motor vehicles, trailers or semitrailers which are exempt from registration and license plates under § 46.1-45 by paying only the title fee and, therefore, I shall answer your first question in this category in the affirmative. In regard to your second question here, since the tax must be paid and collected ``at the time the owner applies to the Division of Motor Vehicles for, and obtains a certificate of title therefor,' there appears to be no provision for collection of the tax upon subsequent purchase of license plates for highway use. My answer to this question renders unnecessary any further consideration of your third question in this category.
"(20) § 58-685.11(a) exempts from the definition of a motor vehicle, `Vehicles which can be moved or drawn on the highways only under special permits and which are permanently attached to the real estate as housing.' Will mobile homes, which can only be moved or drawn on the highways under a special permit, as provided in § 46.1-44, for which a title is desired and which may be mounted on a permanent foundation as living quarters, be subject to the Tax?'
The provisions for special temporary registration or permit set forth in § 46.1-44, Code of Virginia (1950), as amended, by its own terms, do not apply to a mobile home or house trailer which is subject to a license, but only to such mobile homes or house trailers which exceed the size permitted upon the highways by law. Under § 58-685.11(3), which you cite, ``vehicles which can be moved or drawn on the highways only under special permits and which are permanently attached to the real estate as housing' are exempt from the definition of ``motor vehicle.' As I interpret this, it refers to those vehicles which are exempted by § 46.1-41 from title requirement because they may be moved or drawn upon the highway only under special permit under § 46.1-44, Code of Virginia (1950), as amended. Any such vehicle for which no certificate of title is required is exempt from the two per cent tax imposed by Chapter 587. I shall, therefore, answer this question in the negative.
"(21) If application is made whereby one person assumes another person's obligation to pay the remaining payments on a lien or encumbrance recorded against the vehicle in the records of this Division, and no money changes hands nor is any sale price indicated in such a transaction, upon what basis and value is the Tax to be assessed?'
In this instance the tax would be based on the amount of the debt assumed by the purchaser of the car.
Attorney General's Opinion