Tax Type
Retail Sales and Use Tax
Description
Orders via the Internet or telephone; Interstate & foreign commerce exemption
Topic
Appeals
Property Subject to Tax
Taxable Transactions
Date Issued
08-11-2006
August 11, 2006
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear **************:
This will reply to your letter in which you seek reconsideration of the Department's determination of December 8, 2004, issued to ***** (the "Taxpayer"). This letter also acknowledges receipt of the Taxpayer's payment in the amount of *****, representing payment in full of the contested portion of the audit assessment. I apologize for the delay in the Department's response.
FACTS
In the Department's December 8, 2004 letter, it was determined that the retail sales and use tax was applicable to certain gift transactions in accordance with Title 23 of the Virginia Administrative Code 10-210-680. Based on the facts presented at that time, the Department found no basis to conclude that the transactions qualified for the interstate and foreign commerce exemption set out in Va. Code § 58.1-609.10 4.
The Taxpayer, however, disagrees with the Department's position on the basis that the customer takes constructive possession and makes use of the property outside Virginia, and that the property is shipped to a final destination located outside the Commonwealth. The Taxpayer has presented additional facts to support its request for a redetermination.
DETERMINATION
Based on the additional facts presented, Public Document 05-138 (8/22/05) is on point with the Taxpayer's case. This document explains that when an order is placed via the Internet, the transaction is not considered a Virginia sale if the sales order is accepted and the payment is processed by at a location outside Virginia. In that instance, title would transfer to the purchaser in another state and there would be no constructive possession in Virginia. On the other hand, if the sales order is accepted and payment processed in Virginia, the retailer would be required to apply the Virginia tax to the gift transaction.
In this instance, the contested items were purchased by Virginia customers via the Internet or telephone. The orders were accepted and the payments were processed by the Taxpayer outside Virginia. These orders were shipped to individuals in states other than Virginia. Therefore, title transferred to the purchaser in another state and there was no constructive possession in Virginia.
Based on the above, the transactions at issue qualify for the interstate and foreign commerce exemption under Va. Code § 58.1-609.10 4. Accordingly, the audit assessment has been recalculated to reflect the removal of the contested gift transactions. Because the contested assessment has been paid, the Taxpayer will receive a refund of ***** (tax paid of ***** plus associated interest paid of *****.) Interest accrued from the date of the Taxpayer's payment will be added to the refund amount.
The Code of Virginia section, regulation and public document cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. If you have any questions about this response, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at**** *****.
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- Sincerely,
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Janie E. Bowen
Tax Commissioner
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AR/55765.i
COMMONWEALTH of VIRGINIA
Department of Taxation
Department of Taxation
TO WHOM IT MAY CONCERN:
Under the authority of Sections 58.1-1 and 58.1-110 of the Code of Virginia, I hereby delegate to Ronald L. Holt, Deputy Commissioner for Tax Operations, the authority to sign for me any and all documents, including, but not limited to, affidavits, warrants, rulings, appeals, offers in compromise and sales tax revocations in my absence.
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 be in effect from date signed until it is revoked.
__________________ 8/1/06
Janie E. Bowen Date
Tax Commissioner
Acknowledgement: Ronald S. Holt Date: 8/1/06
State of Virginia; County/City of Richmond;
to wit: Subscribed and Sworn to before me this 1st day of August 2006.
My Commission expires 8/31/08.
Lisa C. Tortorella
Signature of Notary Public
Rulings of the Tax Commissioner