Tax Type
Retail Sales and Use Tax
Description
Mobile home leveling blocks; Valid use of exemption certificates
Topic
Exemptions
Property Subject to Tax
Date Issued
01-11-1990
January 11, 1990
Re: §58.1-1821 Application/ Sales and Use Tax
Dear ****
This will reply to your letter of August 18, 1989 on behalf of **** ("taxpayer") seeking correction of a sales and use tax assessment for the period February 1, 1985 through December 31, 1986
FACTS
In response to a revised sales tax audit conducted by the *********** District Office, the taxpayer protests the disallowance of sales tax exemption certificates. The initial audit discovered numerous sales treated as tax-free but substantiated by incomplete or invalid exemption certificates. Pursuant to the audit, the taxpayer was allowed the opportunity to contact customers and to effect completed certificates. The taxpayer maintains that certificates are being disallowed even when ultimately completed. The taxpayer questions the proper procedure to support exemption from the tax when sales are made.
A separate issue for which the taxpayer requests clarification is the treatment of materials used in the leveling of mobile homes i.e. "blocks and wood". The taxpayer is paying the 4 1/2% tax and appears to be charging the cost of these items to the customer inclusive in the price of the mobile home. This has subjected the blocks and wood to the 3% titling tax as well.
DETERMINATION
The Virginia Code under §58.1-623 provides that:
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- All sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale, distribution, lease or storage of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a certificate to the effect that the property is exempt under this chapter.
- All sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale, distribution, lease or storage of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a certificate to the effect that the property is exempt under this chapter.
It is my understanding that this is the second audit of the taxpayer in which this issue has been raised. Therefore, while we have allowed the taxpayer great latitude in its attempts to secure valid certificates, it is not possible to remove sales which cannot be verified as exempt. The audit will be adjusted, however, to delete any transactions for which valid exemption certificates have been furnished. To avoid problems in the future, the taxpayer should obtain exemption certificates from its customers at the time of sale and these should be maintained in the taxpayer's files. Further, the certificates must be completed in full by the taxpayer. A valid certificate taken in good faith at the time of purchase will relieve the taxpayer of its duty to collect the tax.
Based on my 3/27/85 ruling (copy enclosed), the taxpayer may purchase wood blocks and wedges used to level mobile homes exclusive of the tax under a resale exemption certificate, but the taxpayer must collect and remit the 4 1/2% sales tax when such items are resold. The Division of Motor Vehicles does not consider such material to be included in the base for computing the 3% motor vehicle sales and use tax. Any refund due should be forthcoming from DMV to the customer.
Based on the foregoing, I find no basis for correction of the instant assessment. A revised notice of assessment, together with accrued interest since the date of the assessment will be issued to the taxpayer under separate cover and will be immediately due and payable.
If you have any further questions regarding this matter, please do not hesitate to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner