Document Number
04-197
Tax Type
Retail Sales and Use Tax
Description
Sale part of liquidation of the seller's business in Virginia
Topic
Accounting Periods and Methods
Exemptions
Date Issued
10-29-2004


October 29, 2004




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 July 2001 through August 2002. I apologize for the delay in the Department's response.
FACTS

The Taxpayer purchased the assets of another party. The assets included real and tangible personal property. An audit by the Department resulted in the assessment of tax on the amount of the purchase price allocated to tangible personal property. The Taxpayer suggests that this transaction is exempt from the Virginia retail sales and use tax as an occasional sale because the asset sale represents the sale of all or substantially all the assets of the seller's business in Virginia. Accordingly, the Taxpayer asks that the assessment be abated.
DETERMINATION

Virginia Code § 58.1-609.10 2 provides an exemption from the retail sales and use tax for an occasional sale as defined in Va. Code § 58.1-602. That Code section defines an "occasional sale" as:
    • a sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number, scope and character to constitute an activity requiring the holding of a certificate of registration. [Emphasis added.]

In this case, the contract submitted by the Taxpayer provides for the sale of all or substantially all of the assets of the seller with the exception of a minimal amount of excluded assets. A portion of the excluded assets involved prescription and nonprescription drug inventory, but because of regulatory restrictions, these assets could not be sold to the Taxpayer. They were sold to a third-party, pharmacy-management company concurrent with the sale of the assets to the Taxpayer.

Based on the information presented and a review of the purchase agreement, I find that the sale at issue qualifies as an exempt occasional sale. The sale was part of the liquidation of the seller's business in Virginia. Accordingly, the assessment will be abated.

The Code of Virginia sections cited, along with other reference documents, are available on-line in the Tax Policy Library section of the Department of Taxation's web site, located at www.tax.state.va.us. If you 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,

                • Kenneth W. Thorson
                    • Tax Commissioner


AR/50479Q

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46