Rulings of the Tax Commissioner

February 12, 2025

Re: § 58.1-1821 Application: Litter Tax 
    
Dear *****:

This is in response to your letter submitted on behalf of ***** (the “Taxpayer”) in which you seek a refund of litter tax remitted for tax years 2017 through 2021. 

FACTS

The Taxpayer, a florist that provides flower arrangements, plants, gifts, and delivery services, has filed litter tax returns since 1996. Litter tax returns were filed and paid late for the 2017 through 2021 tax years and late filing penalties were assessed. The Taxpayer paid the penalty assessments and filed an application for correction contending that it was not subject to litter tax and is eligible for refunds of all litter tax it has remitted. 

DETERMINATION

Litter Tax

In accordance with Virginia Code § 58.1-1707 A, an annual litter tax is levied and imposed upon every person in the Commonwealth engaged in business as a manufacturer, wholesaler, distributor, or retailer of products detailed in Virginia Code § 58.1-1708 for each establishment from which such business is conducted. 

Virginia Code § 58.1-1708 provides that the litter tax is imposed on manufacturers, wholesalers, distributors, and retailers of food for human or pet consumption; groceries; cigarettes and tobacco products; soft drinks and carbonated waters; beer and other malt beverages; wine; newspapers and magazines; paper products and household paper; glass containers and metal containers or plastic or fiber containers made of synthetic material; cleaning agents and toiletries; nondrug drugstore sundry products; distilled spirits; and motor vehicle parts. While flowers are not a specific product enumerated in the list of taxable items, florists may sell items such as glass, metal, or plastic vases or paper products that would be subject to litter tax. 

A retailer of glass, metal, or plastic vases or containers and paper products would be subject to the litter tax. However, the tax does not apply to a manufacturer, wholesaler, distributor, or retailer that sells incidental items that are not generally held for use in providing its primary business purpose. See Public Document (P.D.) 16-216 (12/22/2016). 

The Taxpayer’s website shows that its floral arrangements are sold in containers that are metal, glass, or possibly plastic. Further, a check of the Taxpayer’s business indicates that it does not sell glass, metal, or plastic vases or paper products apart from its floral arrangements. Based on these facts, the Taxpayer’s primary business purpose is the sale of flowers, and items included in such sales that would subject the florist to the litter tax were incidental to the flower arrangements. As such, the litter tax does not apply to the Taxpayer. 

Refund Claim

Pursuant to the authority granted to the Department under Virginia Code § 58.1-1824, a protective claim for refund can be held pending the outcome of another case before the courts or the claim may be decided based upon its merits pursuant to Virginia Code § 58.1-1821. Because the Taxpayer’s application for correction includes a request for refund, the limitations provided under Virginia Code § 58.1-1824 will be applied.

Virginia Code § 58.1-1824 provides that “[a]ny person who has paid an assessment of taxes administered by the Department of Taxation may preserve his judicial remedies by filing a claim for refund with the Tax Commissioner. . . within three years of the date such tax was assessed.” Virginia Code § 58.1-1824, therefore, expressly limits the right to file a protective claim to cases in which both the filing of the claim and the payment of the assessment occurred within three years of the assessment. See P.D. 86-224 (11/3/1986). In addition, Title 23 of the Virginia Administrative Code (VAC) 10-20-190 A 1 requires all assessed taxes, penalties, and accrued interest for the year or years subject to the request to be paid in full before a taxpayer may file a protective claim.
    
The Taxpayer’s request for a refund was submitted on December 9, 2022. It filed its 2016 litter tax return and paid the tax in May 2017. As such, requests for refunds of litter tax paid for the 2016 tax year and all preceding tax years are outside the three-year limitations period and cannot be granted.

The Taxpayer filed its litter tax returns for the 2017 through 2020 tax years and remitted the tax and late filing penalties in January 2022. It filed its litter tax return and paid its litter tax for the 2021 tax year in August of 2022. The late filing penalty for the 2021 tax year was satisfied in December 2022. Because these payments occurred within the three-year limitations period in accordance with Virginia Code § 58.1-1824, the Taxpayer is eligible for refunds for these tax years. 

Based on the analysis above, the Taxpayer was not liable for the litter tax and timely filed a refund request for the 2017 through 2021 tax years. Accordingly, refunds for the erroneously remitted litter tax and late filing penalties for the tax years indicated above will be issued along with statutory interest.

The Code of Virginia sections and regulation cited are available online at law.lis.virginia.gov. The public document cited is available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this determination, you may contact ***** in the Office of Tax Policy and Legal Affairs, Adjudication and Resolution Division, at ***** or *****@tax.virginia.gov.

Sincerely,

James J. Alex
Tax Commissioner
Commonwealth of Virginia

AR/4415.B