Tax Type
Retail Sales and Use Tax
Taxes of Other Agencies
Description
Motor vehicle dealer; Maintenance warranties; DMV tax
Topic
Basis of Tax
Collection of Tax
Date Issued
03-05-1990
March 5, 1990
Re: Request for Ruling/Sales and Use Tax
Dear *********
This will reply to your letter of November 1, 1989 in which you are seeking a ruling as to a possible credit towards an audit assessment of ********* (the Taxpayer), for taxes paid to the Department of Motor Vehicles.
FACTS
The Taxpayer, a new and used car dealer, was recently audited by the department and was assessed tax on the sale of maintenance warranties which included parts. The Taxpayer collected and remitted the Virginia motor vehicle sales and use tax on the sale of automobiles. The sales price of the automobiles sold by the Taxpayer often included the cost of the warranties. Therefore, the Taxpayer collected and remitted the Virginia motor vehicle sales and use tax on the warranties. The Taxpayer is now seeking a credit against the retail sales and use tax assessed on warranties for the motor vehicle sales and use tax paid to the Department of Motor Vehicles.
RULING
The Virginia motor vehicle sales and use and the Virginia retail sales and use are two separate and distinct taxes. The motor vehicle tax is administered by the Virginia Department of Motor Vehicles and the retail sales and use tax is administered by the Virginia Department of Taxation. The fact that the cost price of the warranties were, in some cases, improperly included in the sales price of the automobile, does not exempt the warranties from the retail sales and use tax.
However, to the extent that the 2% motor vehicle sales tax was erroneously collected and remitted on items subject to the retail sales tax, I will allow a credit for that tax against the retail sales tax assessed.
In view of the above, a revision of the audit will be done as soon as practicable and a revised Notice of Assessment will be forwarded to the Taxpayer. However, for the future, the Taxpayer will be expected to apply the tax to maintenance warranties as set forth in §630-10-62.1 of the Virginia Retail Sales and Use Tax Regulations.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner