Tax Type
Retail Sales and Use Tax
Description
Audit assessment, charges stated separately not subject to the tax
Topic
Accounting Periods and Methods
Appropriateness of Audit Methodology
Returns/Payments/Records
Date Issued
03-11-2002
March 11, 2002
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****
This is in reply to your letter in which you seek correction of the department's retail sales and use tax audit assessment issued to ***** (the "Taxpayer") for the period November 1998 through December 2000. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer sells printed materials to customers. During the audit period, the Taxpayer separately stated the charges for graphic design and typesetting when invoicing customers for printed materials. The Taxpayer contends that it was advised by department personnel that the charges were not subject to the tax if separately stated. Accordingly, the Taxpayer states that the audit is in error and should be revised to remove the separately stated charges.
DETERMINATION
I note that the department's auditor has provided the Taxpayer with several rulings, determinations and related regulations concerning the taxable status of graphic design and typesetting in printed materials sold to customers. The items at issue are charged in connection with the sale of tangible personal property and are clearly subject to taxation based on established regulations that have been in their present form since 1985. Although the Taxpayer maintains that an employee of the department advised that the charges were not taxable, Code of Virginia § 58.1-205 places the burden of proof on the Taxpayer to show that the assessment of tax is incorrect. In this case, this burden has not been met.
Without convincing proof that the Taxpayer was misinformed, especially in light of existing regulations or published rulings and determinations that clearly explain the tax application, there is no basis to waive the tax at issue. Accordingly, the assessment is correct as issued and remains due and payable.
If you should have any questions regarding this matter, please contact ***** of the department's Office of Policy and Administration, Appeals and Rulings, at *****@tax.state.va.us or at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
AR/33364Q
Rulings of the Tax Commissioner