Tax Type
Retail Sales and Use Tax
Description
Assessment for untaxed purchases
Topic
Records/Returns/Payments
Taxable Transactions
Taxability of Persons and Transactions
Date Issued
10-29-2013
October 29, 2013
Re: § 58.1-1821 Reconsideration: Retail Sales and Use Tax
Dear *****:
This will reply to your letter in which you seek reconsideration of the Department's determination letter issued as Public Document (P.D.) 13-45 (3/29/13) to ***** (the "Taxpayer") for the period March 2008 through January 2011.
FACTS
The Taxpayer is a construction contractor. An audit by the Department resulted in an assessment for untaxed purchases. In the initial appeal to the Department, the Taxpayer contended that several purchases held taxable in the audit were for subcontract work and the subcontractor was responsible for the tax. The Taxpayer did not provide supporting documentation to prove that the tax had been paid on the purchases at issue and the assessed tax was upheld. Notwithstanding, the Taxpayer was given an opportunity to present documentation to support its claim that the subcontractor paid the tax on the purchases at issue.
In the reconsideration request, the Taxpayer admits that it is unable to reconcile the tax amounts to the purchases at issue. It is the Taxpayer's position that in the subcontract agreement it was stated that the subcontractor was responsible for the payment of the tax on the purchases at issue, and the agreement supports that such taxes were paid. The Taxpayer continues to seek an adjustment of the Department's assessment for the purchases at issue.
DETERMINATION
The subcontractor's quote (submitted by the Taxpayer) and the subcontractor's agreement do not include the original invoices that would be the basis for proof that the tax has been paid.
Virginia Code § 58.1-205 provides that an assessment by the Department is prima facie correct and that the burden is on the Taxpayer to prove that an assessment is erroneous. In this case, the Taxpayer has not provided the required documentation to prove the assessment is incorrect. Accordingly, there is no basis for a revision and the assessment is correct as issued. With regard to the Department's assessment of penalties, I continue to find no basis for their waiver.
While I understand the Taxpayer's continuing disagreement with the Department's position, this letter represents the Department's final determination with regard to the tax assessment for the audit period at issue. As explained in my prior determination, the Taxpayer's use tax compliance ratio does not meet or exceed the 85% threshold required in Title 23 of the Virginia Administrative Code 10-210-2032 to avoid penalty.
CONCLUSION
The balance of the Department's assessment is correct. An updated bill, with interest accrued to date, will be sent to the Taxpayer shortly. No additional interest will accrue provided the updated bill is paid within 30 days from the date indicated on the bill statement. If the bill is not paid within the 30 days, collection action will commence.
The Code of Virginia section, regulation and public document cited are available online in the Laws, Rules and Decisions section of the Department's website located at www.tax.virginia.gov. If you have any questions regarding this matter, please contact ***** of the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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Craig M. Burns
Tax Commissioner
AR/1-5400149939.Q
Rulings of the Tax Commissioner