SALT Report 1844 – The Virginia Tax Commissioner issued a ruling in regards to a Taxpayer’s request for redetermination of a retail sales and use tax assessment. The Taxpayer sells and rents heavy equipment and provides repair services and replacement parts for the equipment. The Taxpayer does not own a facility in Virginia and does not employ salespeople to solicit sales in the state.
The Taxpayer was audited by the Department and assessed use tax on several untaxed transactions. At the time of the audit, the Taxpayer was not registered to collect Virginia sales and use tax. The auditor determined that the Taxpayer had sufficient nexus with Virginia during the audit period and should have registered to collect use tax on its Virginia transactions. The Taxpayer appealed the assessment on the basis that it did not have sufficient nexus with the state of Virginia.
Upon review, the Commissioner determined that the Taxpayer’s business activities were those of a dealer. Pursuant to Virginia Code § 58.1-612 C)(9) any dealer that “owns tangible personal property that is rented or leased to a consumer in this Commonwealth, or offers tangible personal property, on approval, to consumers in this Commonwealth” meets the nexus criteria.
Further, the Taxpayer was involved in other business activities in the state, including the occasional delivery of goods into the state using its own vehicles, providing repair services for equipment located in Virginia and, occasional sales of tangible personal property in Virginia.
The Commissioner determined that all of these factors support the auditor’s assessment that the Taxpayer had sufficient nexus in Virginia that would require it to register to collect Virginia use tax on its taxable sales and rentals in Virginia. The use tax assessment was upheld.
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