Tax Type
Retail Sales and Use Tax
Description
Untaxed sales: exempt gift certificate sales;documentation to substantiate claim
Topic
Appropriateness of Audit Methodology
Assessment
Records/Returns/Payments
Date Issued
12-21-2012
December 21, 2012
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This reply is in response to your letter submitted on behalf of ***** (the "Taxpayer"), in which you request correction of the retail sales and use tax assessment issued for the period September 2008 through July 2011.
FACTS
The Taxpayer is a retailer. As a result of the Department's audit, the Taxpayer was assessed for untaxed sales. The Taxpayer contends the untaxed amounts represent exempt gift certificate sales and provides documentation to substantiate its claim.
DETERMINATION
Virginia Code § 58.1-205 provides that any assessment of a tax by the Department shall be deemed prima facie correct. The burden of proof lies with the Taxpayer to prove the assessment is incorrect.
The Taxpayer's deductions were tested for a one-month sample period. The Taxpayer was assessed for disallowed untaxed sales based on sample results, which were also used to calculate disallowed untaxed sales for the audit period.
The Taxpayer argues that it was incorrectly assessed as total deductions taken for the sample period were for exempt sales of gift certificates. Although the Taxpayer presents two spreadsheets to support its protest, the spreadsheets indicate no detailed description of deductions and do not tie to total deductions taken for the sample period.
As the result of a discussion with a member of the Appeals and Rulings staff, the Taxpayer provided a third spreadsheet during its appeal. However, total gross sales on the spreadsheet do not tie to total gross sales reported on the return for the sample period. Also, the spreadsheet indicates gift certificate sales of *****, while total deductions taken on the return for the same period were *****.
It is my understanding that several attempts were made by my staff member to contact the Taxpayer regarding the discrepancies. As of this letter date, the Taxpayer has not responded. Based on the foregoing, the Taxpayer has failed to provide reliable documentation to support its protest. Therefore, in accordance with Va. Code § 58.1-205, I find no basis to adjust the assessment.
Based on this determination, the assessment is correct. A revised bill, with interest accrued to date, will be mailed shortly to the Taxpayer. No additional interest will accrue provided the outstanding assessment is paid within 30 days of the date of the bill. Please remit payment within 30 days from the date of the bill to: Virginia Department of Taxation, Office of Tax Policy, Appeals and Rulings, Attn: *****, Post Office Box 27203, Richmond, Virginia 23261-7203.
The Code of Virginia section cited is available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department's website. If you have any questions about this determination, you may contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
AR/1-5114648644.M
Rulings of the Tax Commissioner