Tax Type
Retail Sales and Use Tax
Description
Out-of-state furniture dealer with sales in Virginia
Topic
Taxability of Persons and Transactions
Date Issued
03-20-1990
March 20, 1990
Re: §58.1-1821 Application/Sales and Use Tax
Dear******************
This will reply to your letter of October 18, 1989 on behalf of your client, ********** (the Taxpayer), concerning the sales and use tax audit for the period of January, 1985 through March, 1986.
FACTS
The Taxpayer is a Maryland corporation which operates a retail furniture store in Maryland. The Taxpayer has no business location in the state of Virginia. The Taxpayer was audited by the state of Virginia and held liable for the tax on sales made to Virginia customers which were delivered to Virginia by means other than common carrier.
The Taxpayer feels that in light of the United States Supreme Court decision in Miller Bros. v. Maryland, 347 U.S. 340, 343 (1954), the Taxpayer is not liable for the collection of the Virginia sales tax. The department has held the Taxpayer liable for the tax on sales made to Virginia customers due to the fact that the Taxpayer makes twelve (12) or more deliveries into the state of Virginia in a calendar year.
DETERMINATION
Virginia Code §58.1-612(C)(4) states that a dealer shall be deemed to have sufficient activity within Virginia to register for collection of the use tax if he, "makes regular deliveries of tangible personal property within this state by means other than common carrier." This subsection goes on to say, "a person shall be deemed to be making regular deliveries hereunder if vehicles other than those operated by a common carrier enter this state more than twelve times during a calendar year to deliver goods sold by him."
In accordance with the above cited code section, the Taxpayer has sufficient activity within the state to require collection of the Virginia use tax. While I am aware of the United States Supreme Court decision in Miller Bros. case, the facts of that case are distinguishable from those in the present case. Specifically, Miller Bros. dealt with a border state retailer which made only sporadic sales into the neighboring state (which generated an assessment of only ********* for a four-year period). By contrast, the taxpayer's activities in this case were significantly more far reaching (generating an assessment of ********* over just a 14-month period). It should also be noted that all statutes are presumed to be constitutional and can never be declared unconstitutional except when clearly and plainly so (17 Michie's Jurisprudence, Statutes, §29).
Furthermore, similar statutes have been found constitutional by the Supreme Courts of other states. In re the Matter of Sales or Use Tax Liability of Webber Furniture, 290 N.W.2d 865 (S.D. 1980), dealt with a Nebraska furniture dealer with no business location in South Dakota and which completed all of its sales in Nebraska. Webber Furniture delivered furniture to South Dakota residents using its employees and company owned trucks. The Supreme Court of South Dakota ruled that Webber's activities within the state were sufficient to constitute nexus requiring collection of the use tax. Also see the similar cases of Rowe-Genereux, Inc. v. Vermont Department of Taxes, 411 A.2d 1345 (Vt. 1980) and Cooey-Bentz Co. v. Lindley, 419 N.E.2d 1087 Ohio 1981).
In view of the above, and the fact that it is clearly stated in Virginia Code §58.1-612 that twelve (12) or more deliveries into the state by means other than common carrier is sufficient activity to require registration, I find no basis for the correction of the audit assessment, which is now due and payable in full.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner