Tax Type
Retail Sales and Use Tax
Description
Dealer defined; Collection of tax on sales of medical equipment
Topic
Collection of Tax
Exemptions
Date Issued
08-23-1991
August 23, 1991
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear*****************
This will reply to your letter of June 21, 1991 in which you seek correction of a sales and use tax assessment issued to *************(the Taxpayer) for the period January, 1986 through January, 1991.
FACTS
The Taxpayer is engaged in the retail sale of medical equipment to physicians, surgeons, and other practitioners. An audit of the Taxpayer by the department produced an assessment for the Taxpayer's failure to (1) remit use tax on various purchases of tangible personal property for which no sales tax was paid at the time of purchase by the Taxpayer and (2) collect the sales tax on its sales of medical equipment to customers in Virginia. The Taxpayer contests the assessment of tax on purchases of audiovisual carts purchased for resale and later sold outside Virginia. Additionally, the Taxpayer contends its customers are subject to remittance of the use tax under Virginia Regulation (VR) 630-10-83(B).
DETERMINATION
Va. Code §58.1-602 defines the term "retail sale" to mean, a sale to any person for any purpose other than for resale in the form of tangible personal property..." (Emphasis added) Since the Taxpayer purchased the audiovisual carts for resale and later sold the carts outside of Virginia, these purchases are not subject to the Virginia Retail Sales and Use Tax. Therefore, the audit will be revised to remove these carts from the audit findings.
VR 630-10-29.1© defines a dealer as a person who:
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- [s]ells at retail, or who offers for sale at retail, or who has in his possession for sale at retail, or for use, consumption or distribution or for storage to be used or consumed in this state, tangible personal property.
The Taxpayer meets the above requirement and is considered a dealer in Virginia. As such, the Taxpayer is obligated to collect the sales tax from its customers in Virginia. Furthermore, Va. Code §58.1-603 (copy enclosed) imposes the tax on "every person who engages in the business of selling at retail...tangible personal property in this Commonwealth..." And finally, Va. Code §58.1-625 (copy enclosed) provides that "any dealer who neglects, fails, or refuses to collect such tax upon every taxable sale, distribution, lease, or storage of tangible personal property made by him, his agents, or employees shall be liable for and pay the tax himself..." Under the Code and regulations cited above, the Taxpayer is being held liable as a dealer for the tax it did not collect and for which it did not take a valid certificate of exemption.
While it is true that the Taxpayer's customers should have remitted use tax on any untaxed purchases, dealers are legally obligated to collect and report the tax on their sales to customers. As such, the department may look to either the dealer or the purchaser for such tax liability.
Based upon the facts presented, the assessment issued to the Taxpayer will be revised to reflect the removal of the audiovisual carts from the audit. However, the balance of the assessment, relating to the untaxed sales to customers in Virginia, will remain due and payable.
If you have any further questions concerning the issues raised in this appeal, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner