Tax Type
Retail Sales and Use Tax
Description
Subcontractor; Landscaper invoice
Topic
Collection of Delinquent Tax
Taxability of Persons and Transactions
Date Issued
09-09-1988
September 9, 1988
Re: §58.1-1821 Application/Sales and Use Tax
Dear********************
This will reply to your letter dated July 13, 1988 regarding a correction of sales and use tax assessed to (taxpayer) for the period January 1, 1984 through September 30, 1986. You ask that the department reconsider its position set forth in the May 10, 1988 letter denying a correction of tax.
The taxpayer maintains that the agreement between the two parties specifically states that the subcontractors agree to pay all sales, use and other taxes. The taxpayer has paid the fixed price of the subcontracts in full and contends that the tax has already been collected from the taxpayer by the landscaping subcontractors. However, the subcontractors have failed to remit the tax to Virginia. Thus, the taxpayer has satisfied its "legal debt" and payment of the tax again would amount to double taxation on identical goods.
Virginia Regulation 630-10-24 provides that "the dealer must separately state the amount of the tax and add the tax to the sales price or charge." (emphasis added) The landscaping invoices submitted by the taxpayer did not separately state the payment of any tax. Since the tax is not separately stated on the invoices, I must conclude that the tax was not paid and the auditors properly assessed the tax for the landscaping work performed by the subcontractors. As set forth in our earlier letter, while it is true that the taxpayer's landscape subcontractors were obligated to properly collect and remit the tax on their sales to the taxpayer, the department may look to either the retailer or purchaser for such tax liability.
However, if the taxpayer can provide the department with any documentation or corrected invoices showing that the tax was actually paid to its subcontractors, the assessment will be adjusted. The department will accept as documentation letters from suppliers to the effect that they are registered for the collection of the Virginia sales tax, that tax was collected from the taxpayer on the transactions in question, and that the tax was remitted to the department. The taxpayer may provide any such documentation to the department's Technical Services Section, P. O. Box 6-L, Richmond, Virginia 23282 within forty-five days from the date of this letter.
In the event that such information is not provided to the department, there would be no basis for making any adjustment to the assessment. However, should the taxpayer desire to avail itself of the other remedies under the law, §58.1-1825 of the Code of Virginia provides that an application for correction of an erroneous assessment may be filed with the circuit court provided that the assessment is paid in full and such application is filed within three years from the date of the assessment.
If you have any other questions, please do not hesitate to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner