Tax Type
Intangible Personal Property Tax
Description
Capital not otherwise taxed
Topic
Basis of Tax
Date Issued
03-04-1986
March 4, 1986
Re: Section 58.1-1821 Application: Capital Not Otherwise Taxed
Dear ****************
This will reply to your letter of August 28, 1985 in which you seek relief of assessments of Virginia tax on capital not otherwise taxed against ************* ("Taxpayer").
FACTS
Taxpayer, a paving contractor, underwent an audit for the years 1979 through 1984, in which tax, penalty and interest was imposed. Taxpayer protests the application of CNOT to its inventory for 1979 through 1984 on the grounds that such inventory was already subject to the Virginia retail sales and use tax. Taxpayer also asserts that the $************** note payable to the Commonwealth of Virginia included in 1982 should be deducted from accounts receivable on the ground that the note payable represented overcharges being repaid to Virginia which were originally included in accounts receivable.
DETERMINATION
The tax on capital not otherwise taxed is a property tax based on the value of assets as of January 1. It is a tax separate and distinct from the retail sales and use tax, which is a tax on the sale, use or consumption of tangible personal property in Virginia. When a taxpayer includes the retail sales and use tax paid in determining the valuation of assets carried on its books, the entire value of the assets is properly subject to the CNOT tax. Accordingly, the inventory was properly included in the audit adjustments.
With respect to the note payable for 1982, to the extent that the note payable represents amounts which were overcharges which are now being repaid, a deduction from accounts receivable will be allowed. A deduction will not be allowed for any portion of the note payable which represents anything other than overcharges being repaid.
Adjustments to the audit will be made in accordance with this determination letter.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner