Tax Type
Retail Sales and Use Tax
Description
Penalty for failure to collect and remit the tax
Topic
Penalties and Interest
Date Issued
12-11-1985
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December 11, 1985
Dear ****
This will reply to your letter of October 31, 1985, requesting acceptance of an offer in compromise agreement between the Virginia Department of Taxation and your client.
As stated in my previous letter, dated July 31, 1985, the department is unable to act on your request without first receiving the relevant information about your out-of-state client. There is simply no provision in Virginia law granting the Tax Commissioner the authority to enter into an agreement such as the one you have proposed.
Please note however that Section 58.1-634 of the Virginia Code provides for the assessment of sales and use tax any time within three years of the date on which such taxes became due and payable. However, the section continues, whenever there is a "failure to file a return, the taxes may be assessed, or a proceeding in court for the collection of such taxes may be begun without assessment" for an additional three years from the date on which such taxes became due and payable. Furthermore, specific penalties of from 25-5O% of the tax due and payable (in addition to accrued interest) shall be added to such tax due. (See Section 58.1-635 of the Virginia Code).
Based on the foregoing, the longer your client fails to properly register and collect the tax, the greater his risk of exposure to such penalties and interest. However, Section 58.1-105 of the Code authorizes the department, "in all cases in which a penalty is imposed upon the taxpayer for failure to comply with the requirements of the tax laws,...to accept offers made in compromise or in lieu of such penalties.
Therefore, as stated in my previous letter, I would be inclined to look favorably on such an offer from your client upon receipt of the required information.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner