Tax Type
Retail Sales and Use Tax
Description
Erroneous collection of tax
Topic
Collection of Delinquent Tax
Date Issued
11-01-1989
November 1, 1989
Re: Request for Ruling/Sales and Use Tax
Dear****************
This will reply to your letter of May 19, 1989 in which you request the state of Virginia's policy on the erroneous collection and remittance of state sales and use tax.
The erroneous collection and remittance of the Virginia sales and use tax is addressed in §58.1-625 of the Virginia Code and §630-10-24 of the Virginia Retail Sales and Use Tax Regulations. §58.1-625 of the Code states, in part, "any dealer collecting the sales or use tax on transactions exempt or not taxable under this chapter shall transmit to the Tax Commissioner such erroneously or illegally collected tax unless or until he can affirmatively show that the tax has since been refunded to the purchaser or credited to his account." Subsection C of Regulation 630-10-24 also deals with the erroneous collection of the tax on nontaxable transactions and states the following:
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- All sales and use tax collected by a dealer is held in trust for the state. Therefore, any dealer collecting the sales or use tax on nontaxable transactions must remit to the Department of Taxation such erroneously or illegally collected tax unless he can show that the tax has been refunded to the purchaser or credited to the purchaser's account.
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- Subsection D of this same section goes on further to state, "any dealer who collects tax in excess of a 4 1/2% rate or who otherwise overcollects the tax,... must remit any amount overcollected to the state on a timely basis."
As can be seen from the above, Virginia does allow a refund to the dealer of any sales and use tax which has been erroneously collected and remitted to the state. However, the dealer must provide proof to the state that the tax has been refunded to the purchaser or credited to the purchaser's account. Refunds cannot be authorized unless the request is made within three years from the due date of the return.
If you should have any further questions, please feel free to contact this department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner