Tax Type
Retail Sales and Use Tax
Description
Criteria for corporate officer under Va. Code § 58.1-1813
Topic
Persons Subject to Tax
Responsible Officer
Date Issued
11-01-2013
November 1, 2013
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in response to your letter in which you request correction of the converted retail sales and use tax assessment on behalf of ***** (the "Taxpayer") for the period February 2004 through July 2009. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer served as chief executive officer of ***** (the "Company") from March 2006 to July 2009. The Company ceased business in 2009. In 2010, the Department audited the Company and issued a retail sales and use tax assessment (the "original assessment") to the Company for untaxed sales of meals. Upon failure of the Company to pay the assessment, the Department converted the liabilities to the Taxpayer as a penalty assessment (the "converted assessment") in accordance with Va. Code § 58.1-1813.
The Taxpayer maintains that he was not under any duty to collect, report, and pay over sales tax to the Department. Furthermore, the Taxpayer maintains that he had no actual knowledge of any failure or attempt to evade the payment of such tax. Accordingly, the Taxpayer contends that he does not meet the minimum criteria for treatment as a corporate officer, as defined in Va. Code § 58.1-1813, and thus should not be held liable for the converted assessment.
Notwithstanding the foregoing, the Taxpayer has presented evidence that the Company's estate has been in Chapter 7 bankruptcy since 2010. In February 2013, the Taxpayer entered into a settlement agreement with the Company's trustee, the Department and others that would provide a settlement payment to the Department for the original assessment. Upon payment in full of the agreed to settlement payment, the Department agreed to waive and discharge the Company and Taxpayer from any and all claims, debts, and liabilities that the Department may have existing prior to the date of such agreement. The parties to such agreement also agreed not to commence any action against another party to the agreement with respect to any of the claims released by such agreement. In addition, this agreement prohibits the Department from taking any further action based upon, arising out of or related to such matter. The bankruptcy court has subsequently approved the settlement agreement.
DETERMINATION
Based on the settlement reached in this case, and the fact that the settlement amount has now been remitted to the Department, the converted liabilities assessed in this case are no longer applicable. Accordingly, there is no need to address the issue of whether the Taxpayer meets the criteria for corporate officer under Va. Code § 58.1-1813. Based on this determination, the converted assessment has been discharged in its entirety.
If you have any questions about this determination, please contact ***** in the Department's Office of Tax Policy, Appeals and Rulings, at *****.
Sincerely,
Craig M. Burns
Tax Commissioner
AR/1-5370155963.R
Rulings of the Tax Commissioner