89-131 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Absorption of tax; Sales promotion

Topic

Collection of Tax

Date Issued

04-27-1989

April 27, 1989

Re: Request for Ruling: Sales and Use Tax

Dear ******************

This will reply to your letter of March 1, 1989, in which you request permission to advertise the absorption of the sales tax for customers as part of a sales promotion.

Va. Code §58.1-626 provides:

- No person shall advertise or hold out to the public, directly or indirectly, that he will absorb all or any part of the sales or use tax, or that he will relieve the purchaser, consumer, or lessee of the payment of all or any part of such tax... Any person who violates this section shall be guilty of a Class 2 misdemeanor.

The promotion that you will hold is not violative of the above statute, provided that all promotional materials make clear that (1) the selling price of an item will be reduced by an amount equal to the sales tax that would normally be due on the transaction, and (2) the sales tax will in fact be collected from the customer on the reduced selling price. In addition, the sales tax collected should be clearly shown on invoices provided to customers.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner