Tax Type
Retail Sales and Use Tax
Description
Credit against the Taxpayer's liability for taxes paid in error by its customers
Topic
Clarification
Credits
Returns and Payments
Date Issued
04-18-2005
April 18, 2005
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in response to your letter in which you seek correction of the retail sales and use tax assessment issued to ***** (the "Taxpayer") for the period April 2000 through March 2003.
FACTS
The Taxpayer operates a steel and metal fabrication plant outside Virginia. In addition to the fabrication of steel and other metals, the Taxpayer also installs the fabricated materials in Virginia real estate construction projects. As a result of the Department's audit, the Taxpayer was held liable for the sales and use tax on materials installed or erected for Virginia real estate construction projects. The Taxpayer contends that the sales and use tax on these construction projects has been paid by and remitted to the Department by its customers. As a result, the Taxpayer requests that a credit be allowed against the sales and use tax liability assessed to the Taxpayer in the amount of the amount of tax paid by its customers.
DETERMINATION
Administrative Appeal
Virginia Code § 58.1-1821 provides that all applications to the Tax Commissioner for correction of assessments shall fully set forth the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention. Title 23 of the Virginia Administrative Code (VAC) 10-20-160 C further explains that such submissions must sufficiently identify the taxpayer, the type of tax, the taxable period, the remedy sought, the date of the assessment and, if paid, the date of payment, and a statement signed by the taxpayer or duly appointed or authorized agent or attorney setting forth each alleged error in the assessment, the grounds upon which the taxpayer relies and all facts relevant to the taxpayer's contention.
In this instance, the Taxpayer has not complied with the terms of Va. Code § 58.1-1821 and Title 23 VAC 10-20-160, in that the Taxpayer has not provided the Department with a complete appeal. The Taxpayer has not stated clearly the alleged error in the assessment, the grounds on which it relies, nor has it given sufficient facts relevant to its position.
Audit Findings
The Taxpayer indicates in a recent letter to the Department that "the lack of detail, back up and particulars herein is due to the fact that we never fully understood the work of your people here and have been unable to secure assistance from your appropriate resources to help us." It is my understanding that the audit staff held numerous audit conferences with the Taxpayer at various times during the past two years, providing the Taxpayer with the opportunity to receive clarification regarding the audit findings. Furthermore, the audit staff has been available to assist the Taxpayer and communicate the audit findings.
Taxes Paid by Customers
As to your position that some of the customers have paid Virginia retail sales and use tax on the fabricated materials that you erected and installed on Virginia real estate construction projects, the Department cannot allow a credit against the Taxpayer's liability for taxes paid in error by its customers. Title 23 VAC 10-210-410 D states, "a fabricator who contracts to perform services with respect to real estate construction . . . is classified as a using or consuming contractor and must pay the tax on the cost price of the raw materials which make up such fabricated property." The law and regulation are well established and have been consistently applied. The Department cannot ignore the law in this case and, therefore, cannot allow a credit for taxes paid in error by the Taxpayer's customers.
I understand that the auditor has advised you on two separate occasions to inform your customers to seek a credit or refund of any use tax paid by them on the construction projects that were installed by the Taxpayer. These credits and refunds will be allowed only within the three-year statute of limitations.
CONCLUSION
Based on the foregoing, no further adjustment to the audit is warranted. The assessment remains due and payable. This letter constitutes the Department's final determination on this matter.
An updated bill, with interest accrued to date, will be mailed shortly to the Taxpayer. No further interest will accrue provided the outstanding balance is paid within 30 days from the date of the bill. The Taxpayer should remit its payment to: Virginia Department of Taxation, 3600 West Broad Street, Suite 160, Richmond, Virginia 23230, Attn: *****. If you have any questions concerning payment of the assessment, you may contact ***** at *****.
The Code of Virginia and regulation sections cited, along with other reference documents, are available on-line in the Tax Policy Library section of the Department of Taxation's website, located at www.policylibrary.tax.virginia.gov. If you have any questions about this determination, you may contact in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.
-
-
-
-
-
-
-
- Sincerely,
-
-
-
-
-
-
-
-
-
-
-
-
-
- Kenneth W. Thorson
-
- Tax Commissioner
-
- Kenneth W. Thorson
-
-
-
-
-
-
AR/54010i
COMMONWEALTH of VIRGINIA
Department of Taxation
-
-
-
-
-
-
-
- TO WHOM IT MAY CONCERN:
-
-
-
-
-
-
Under the authority of §§ 58.1-1 and 58.1-110 of the Code of Virginia, I hereby delegate to Gerald Gwaltney, Deputy Tax Commissioner, the authority to sign for me, in my absence, any and all documents, including, but not limited to, affidavits, warrants, rulings, appeals, offers in compromise and sales tax revocations.
This authority shall not extend to matters or documents related to my service on any statutorily created board or commission, including, but not limited to, the Compensation Board and Treasury Board.
This authority shall become effective January 10, 2003, and shall remain in effect until revoked.
Done at Richmond, Virginia, this 13th day of January 2003.
Kenneth W. Thorson
Tax Commissioner
Acknowledgement: Gerald H. Gwaltney Date: January 13, 2003
Done this 13th day of January 2003 in the City of Richmond, State of Virginia. My Commission expires 9-30-2003.
Sylvia J. Wesson
Notary Public Notary Seal
Rulings of the Tax Commissioner