Tax Type
Retail Sales and Use Tax
Description
Dealer waiver of registration
Topic
Collection of Tax
Date Issued
10-29-1990
October 29, 1990
Re: Request for Ruling: Sales and Use Tax
Dear *************
This will reply to your letter in which you request a ruling on whether ****** (The Taxpayer) must register as a dealer for sales and use tax purposes.
FACTS
The Taxpayer provides a central warehouse, storage, and delivery system for common merchandise only for several associated corporations. The Taxpayer pays the sales tax at the time of the initial purchase and transfers the merchandise at the original cost plus the tax paid to the participating corporations, without any markup.
This procedure was approved by the department and used for approximately ten years by one of the participating corporations and carried over to the Taxpayer. The Taxpayer requests that it be allowed to continue the method in use and not be required to register as a dealer.
RULING
Because the Taxpayer realizes no profit from the sale of merchandise and because of the administrative problems associated with the dealer requirements, the department will waive the dealer requirements for the Taxpayer under the authority granted by Va. Code §58.1-614.
This waiver of the requirement for registration as a dealer is conditional upon the Taxpayer paying the applicable tax on its purchases and not marking up its merchandise. In the event the Taxpayer realizes a profit from the transfer of merchandise to its associated corporations, this exemption from dealer requirements will be withdrawn.
Additionally, this waiver of the requirement for registration as a dealer is extended to the member banks conditional upon the process continuing in its present form. Each member bank should be provided a copy of this letter for possible future audits.
If you have any further questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner