Tax Type
Retail Sales and Use Tax
Description
Statute of limitations for nonfiler
Topic
Statute of Limitations
Date Issued
01-15-1987
January 15, 1987
Re: §58.1-1821 Application/Sales and Use Tax
Dear********************
This will reply to your letter of September 24, 1986, in which you submit an application for correction of sales and use tax assessed to *********** as the result of a recent audit.
FACTS
************ (Taxpayer) is engaged as both a wholesaler and an exporter of tangible personal property. As such, all of the taxpayer's sales are exempt from the Virginia sales tax; thus, the taxpayer is not registered for collection of the tax. Though not registered for sales tax collection, the taxpayer also has not filed use tax returns with the department.
A recent audit produced an assessment for the taxpayer's failure to remit the use tax on purchases for its own use or consumption (and not for resale or export) upon which the Virginia sales tax was not paid. As use tax returns were not filed by the taxpayer during the course of the audit period, the assessment was for a period covering four years. The taxpayer contests the assessment, stating that the audit should not exceed the normal three year statute of limitations as the taxpayer had been previously advised by the department that registration for the sales tax would not be necessary.
DETERMINATION
§58.1-634 of the Code of Virginia provides generally that sales and use taxes "shall be assessed within three years from the date on which such taxes became due and payable." However, the statute also provides that "[i]n the case of...a failure to file a return, the taxes may be assessed...at any time within six years from such date." In this instance, the statute of limitations was extended beyond the normal three year period due to the taxpayer's failure to file use tax returns with the department. Nonetheless, it is urged that the fourth year be deleted from the department's audit because the taxpayer was not made aware of its responsibility for payment of the use tax.
The taxpayer specifically notes that it contacted the department to learn of its liability for the sales tax. At that time the taxpayer was correctly advised that registration for the sales tax would not be required, provided that it made no taxable sales and obtained exemption certificates from customers. The taxpayer does not note, however, whether it inquired about its use tax liabilities under Virginia law.
In any event, it is a well established principle of sales and use taxes generally that the use tax applies when the sales tax is not paid on purchases for one's own use or consumption. This is certainly true in Virginia, where the state Supreme Court has affirmed that the use tax is applicable "if the property was purchased outside Virginia and would have been subject to the sales tax if had been purchased within this State" or "if the purchase was made in Virginia but the sales tax was not paid." (See Commonwealth v. Miller-Morton, 220 Va. 852, 263 S.E.2d 245 (1980)).
As the concept of the use tax is well grounded in sales and use tax law generally and in Virginia law specifically, I can find no basis in this instance for waiver of the tax assessed beyond the normal three Year statute of limitations.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner