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Cecil H.
Underwood, Governor |
Volume 13, Number 1 |
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Patricia A. Ennis, Assistant Editor | |
Commissioner Palmer Travels to Romania
State Tax Commissioner, Joseph M. Palmer, was one of three people chosen nationwide by the U.S. Department of Treasury to form a team to travel to Bucharest, Romania for three weeks to assist the Ministry of Finance in setting up and organizing a taxpayer services directorate. The team was in Bucharest the last half of May and the first week of June, 1999.
Commissioner Palmer noted that dealing with a country which is 2,000 years old and run by a government only nine years old was very exciting and challenging. As Romania is one of the last countries to be facing the challenge of coming out from Communist domination, there are many challenges and opportunities facing the country at this time. The Commissioner noted his group was warmly received, and that he believes the country has great potential and its people are very friendly and pro-American.
While the Commissioner was in Romania, the inflation rate rose to 40%, the last and largest state-owned bank failed and for the first time the government defaulted on its payroll. With virtually all commercial and state banks having collapsed, the economy is strictly cash, which requires no record keeping. Accordingly, individuals and many organizations feel no need to file a tax return or pay taxes, which has led to an economic crisis for the government.
The mission of the team was to assist the Ministry of Finance in educating the population as to what taxes were due by specific individuals and organizations and the proper method for payment in order to attempt to increase voluntary compliance with the tax laws. Except for three days, the group worked in the capital city of Bucharest. The other three days were spent in Slatina, the headquarters of the Ministry of Finance of Olt Judet; a judet being similar to a county in West Virginia.
Romania is currently seeking assistance from various outside resources in an attempt to become eligible for assistance from the European Union, the International Monetary Fund and the World Bank, which have all placed certain reform requirements on the country prior to it being eligible to obtain assistance from these organizations.
In Romania, an entity’s tax liability is generally determined by negotiations with a member of the Ministry of Finance to reach an amount that will satisfy the tax liability. Unlike the United States or the State of West Virginia, Romania is divided into 41 judets, with the city of Bucharest divided into 7 sectors. Each of these judets and sectors are a separate, autonomous taxing authority. Rulings of any one judet or sector may be exactly opposite to an adjacent judet or sector.
Romania plans to implement a global income tax on January 1, 2000, that will broaden the base of those subject to tax and lower the rate of tax. They recently entered into the largest contract ever with IBM to acquire computer systems and scanners to electronically input the global income tax returns and keep track of all taxpayers and their liabilities.
The Commissioner noted another problem with tax collection efforts was that 45% of the nation’s 25 million people do not have income from an outside source but grow their own food and take care of their families themselves. Additionally, Parliament would routinely grant a “tax holiday” for specific taxpayers or industries, exempting them from paying taxes for a specified period of time.
Overall, it was believed the taxpayer services project was well received by the Ministry of Finance. The team felt that their visit placed Romania one step closer towards an effective and efficient tax system to allow Romania to provide the goods and services to its people that only a national government can do effectively.
SEATA Celebrates Its Tenth Anniversary
The tenth anniversary of the SEATA (Southeastern Association of Tax Administrators) Exchange Agreement will occur this year. This compact was formed in 1989 to exchange information regarding out-of-state vendors who sell merchandise in the various states but do not collect and remit consumers sales tax. The agreement was initiated to improve the collection of use taxes on these sales.
The original agreement, which was signed by Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia, provided for the exchange of information for sales and use taxes. The original two goals of the agreement were to solicit voluntary compliance from the businesses not collecting sales tax, and to exchange audit information among the member states on untaxed sales. In 1991, the agreement was expanded to include the exchange of information for corporation income taxes and all other state taxes.
To implement the exchange of information, a committee made up of representatives from each state was formed. The current mission statement of the Committee is “to facilitate the exchange of information between and among the SEATA states, develop procedures and techniques for exchanging this information; inform and assist each other in the interpretation of tax laws; and develop and maintain a cooperative attitude between the SEATA states in order to encourage the voluntary compliance of state tax laws.”
Although the SEATA Information Exchange Committee continues to seek methods to level the playing field between the “Main Street” merchants and their out-of-state competitors, it has expanded the discussions and interchange of information to other common concerns of tax administrators.
For example, observant of the technological advancements and the concomitant use of computers by the field auditors, the Committee has sponsored workshops on computer assisted auditing. Presentations have been made by member states on methods and procedures for accessing electronic records, sampling methods, securing taxpayer data and maintaining internal controls.
The efforts of the Committee along with other endeavors to improve compliance have helped to increase use tax collections in West Virginia. Use tax collections have risen from 27 million for fiscal year 89/90 to 68 million projected for fiscal year 98/99. This reflects a growth rate of 149 percent, while the growth in general fund type revenue between fiscal year 89/90 and fiscal year 98/99 was less than 47 percent.
Unquestionably, the compact has helped foster cooperation among the member states through the exchange of information and ideas on many topics of common interests for which its Committee has served as a forum.
Alice Hall, Manager
Auditing Division
The following credit schedules, forms and publications have been created or revised within the first and second quarters of 1999. If you would like a copy of one of these publications, please refer to the information provided below to order.
TSD-1: Publications Available (Rev. 2/99)
TSD-2: Tax Division Telephone Numbers (Rev. 2/99)
TSD-404: Timber Severance Tax Requirements for Non-Residents (Rev. 1/99)
TSD-382: Commonly Asked Questions About the Special Tax on Coal (Rev. 3/99)
Forms WV/CST-AF 1: Affidavit for an Individual Filing a Claim of refund for Consumers Sales and Service Tax or Use Tax (Rev. 6/99)
WV-2848: Authorization of Power of Attorney (Rev. 6/99)
West Virginia Code, § 11-10-17a, requires the State Tax Department to establish interest rates every six months based on the adjusted prime rate charged by banks. The interest rate shall not be less than 8 percent.
The rate of interest on underpayments and overpayments of taxes, and on public contracts when final payment is delayed, is 8 percent for the period beginning January 1, 1999 and ending June 30, 1999.
Legislature Passes Bill Implementing the Tobacco Master Settlement Agreement
On November 23, 1998, leading US tobacco product manufacturers entered into a "Master Settlemen Agreement" with the State of West Virginia. This agreement obligates these participating manufacturers, in return for a release of past, present and certain future claims against them, to pay substantial sums of money to the State based in part on their volume of sales. This money will fund a national foundation devoted to the interests of public health. These manufacturers are also required to make substantial changes in their advertising and marketing practices with the intention of reducing underage smoking.
Senate Bill No. 372 requires the manufacturers who did not participate in the agreement to place a statutorily prescribed amount of money, based on their sales of cigarettes and roll your own tobacco in West Virginia, into a qualified escrow account. Each nonparticipating manufacturer who places funds into escrow is required to certify to the Attorney General that they are in compliance with the legislative requirements.
The purpose of this bill is to establish a reserve fund to guarantee a source of compensation and to prevent nonparticipating manufacturers from receiving large, short-term profits and then becoming judgement-proof before liability may arise.
Administrative Notice 99-18 instructs registered wholesalers distributing cigarettes in West Virginia to report sales for each nonparticipating manufacturer. These sales will be recorded on a schedule and filed simultaneously with the Monthly Cigarette Tax Report. To facilitate the difficult task of providing a comprehensive listing of these manufacturers, the Excise Unit of the Internal Auditing Division will supply wholesalers the names of participating manufacturers and as many nonparticipating manufacturers as are discovered from available information. The wholesaler is required to furnish any additional manufacturers, not listed as a participant, on the schedule.
Record of these reported sales will be maintained in the Excise Unit and provided to the Attorney General upon request.
Tonja Oaks
Internal Auditing Division
Excise Unit
Preprinted Returns Speed Processing
The introduction of newer high-tech equipment (such as scanners) and utilization of Intelligent Character Recognition (ICR) software has quickened the gathering and processing of information.
The use of preprinted forms provided by the West Virginia State Tax Department is preferred, particularly with regard to Estimated Payment Vouchers, Consumers Sales and Service Tax returns and Withholding Tax returns.
A number of factors are considered when successfully designing the forms to be used with the high speed scanners. The paper must be of the correct weight and size to feed through the scanner at a high speed. Paper that does not feed correctly creates poor images and may cause forms to jam inside the scanner. Forms are also designed with a scan line, which includes:
- the account number
- check digit
- tax period ending and
- tax code
Specific fonts and size parameters are required by ICR software. Response boxes are designed with special drop out ink and both color and size of the boxes must meet specific standards. Reference marks are placed on the form to orient the scanner software to the correct scanning location. The scanner does not see the boxes, only the hand-printed numbers within the boxes.
Tax returns are sorted as they are submitted to the Tax Department. Those on preprinted forms do not need to be screened before processing. The preprinted information allows for automated verification. This not only speeds up the process of capturing data, but insures credit is made to the appropriate account. Returns that are not preprinted or have a change are checked against the Department’s computer database before being sent to data entry. In data entry these returns cannot be scanned, but must be key entered manually, which delays processing.
To successfully use the newest data capturing equipment, forms specifically designed to take advantage of this technology should be used. In the event, however, preprinted forms are not available for timely remittance, please use the alternative resources available, i.e., the Department's Internet website.
Nancy Noe
Revenue Division
Technology Increases Productivity In Compliance Division
The Compliance Division of the Tax Department has experienced exceptional growth. In 1990 the Division consisted of 55 employees and collected around thirty million dollars in delinquent taxes. In 1998 employment remained at fifty-five employees, while delinquent tax collections had increased to over eighty-five million dollars.
A part of the Tax Department’s long term strategic plan has been to provide every employee involved in tax administration with a personal computer and the necessary computer applications to enable them to work more efficiently and to increase productivity without increasing employment. The Compliance Division is close to attaining this goal.
The Division is currently in the process of installing personal computers in the Regional Office’s and networking them together with the central office in Charleston. The acquisition of computer hardware, software and training our employees has in itself improved our ability to communicate and to share information. However, major increases in efficiency and productivity has come with the development of stand-alone programs and applications specific to the functions of the Compliance Division.
Computer programs have been designed to automate manual and clerical type functions that had been time consuming and inefficient. For example, every employee in the Compliance Division who is involved in the collection process maintains a large amount of statistical data that assists in the measuring the performance of the Division and in the collection programs. Each individual's data is complied into reports for each office and operating unit. That information is then consolidated into a statistical report and analysis for the entire division.
As a result of the new computer applications, statistical program has been fully automated. The program automatically compiles and consolidates statistical data entered by each office and unit. The data is then electronically transferred to the Charleston Central Office and automatically compiled into a report for the division. Other computer applications allow us to track and manage our inventory of delinquent accounts and documents. Programs have been written that automatically account for, assign and track inventories of bad checks, distress warrants, field audit liabilities and liabilities resulting from administrative decisions. A sophisticated payment plan billing system has been developed that automatically provides monthly statements, updates, balances due, calculates interest and penalties and provides our agents with monthly activity reports.
The automation of these formally manual, time consuming clerical type functions have freed our revenue agents of these tasks and greatly increased the amount of their time spent on more productive collection activities. This increased efficiency and effectiveness also leads to greater job satisfaction that results in increased productivity.
James Dixon, Director
Compliance Division
An Administrative Decision in the Office of Hearing and Appeals, Docket Number 93-549 C was inadvertently published and distributed. This decision has never been signed, dated, or issued.
A santitized version of the rough draft of this decision was mistakenly published in March, 1996 as part of a response to a Freedom of Information Act request for a massive number of documents from the Department.
The purported Administrative Decision in Docket Number 93-549 C is not precedent as it was never issued to the taxpayer.
The Department apologizes for the error.
R. Michael Reed, Chief Administrative Law Judge
Office of Hearings and Appeals
Office of Hearing and Appeals Docket Number System
The first two digits of the docket number identify the year the petition was filed. The next three digits represent the number of the petition, and the code letters (shown below) identify the tax and issue. Example: 90-280 GCZ.
B
Business and Occupation Tax
BB
Beer Barrel Tax
BN
Bingo
C
Consumers Sales and Service Tax
CL
Corporate Charter Tax
CP
Special Tax on Coal Production
DR
Declaratory Ruling
FN
Franchise Tax
FS
Business Registration Tax
G
Gasoline and Special Fuels Excise Tax
GC
Gasoline and Special Fuels Sales Tax
GU
Gasoline and Special Fuels Use Tax
HP
Medicaid Enhancement Tax
I
Estate Tax
IFTA
International Fuel Tax Agreement
K
Coal Reclamation Tax
L
501 C Status
M
Motor Carrier Road Tax
N
Corporation Net Income Tax
P
Personal Income Tax
R
Raffle
S
Soft Drink Tax
SV
Severance Tax
SW
Solid Waste Tax
T
Carrier Income Tax
U
Use Tax
W
Withholding Tax
WL
Wine Liter Tax
WN
Wine Sales Tax
X
Cigarette Tax
"R"
prefix indicates a refund of the designated tax
"D"
suffix indicates a Davis issue
"(R)"
suffix indicates paid under protest
"S"
suffix indicates attempt to resolve through issuing unit
"Z"
suffix indicates small claims case
Every Month
Returns and payments that fall due on the same date in each and every month of the calendar year are as follows:
Taxpayers incurring a B & O Tax, Severance Tax, Minimum Coal Severance Tax or Telecommunications Tax liability in excess of $1,000 per month are required to file monthly returns; forms are due the last day of each month for a prior month with the exception of the May return which is due on June 15th. Taxpayers whose tax liability is $1,000 per month or less must file quarterly returns on or before the last day of the month following the close of the quarter.
Persons incurring a tax liability of more than $50 per month are required to file monthly Severance and Business Privilege Tax returns. The returns are due the last day of the following month with the exception of May which is due on June 15th.
State Gasoline Tax reports and taxes are due for the preceding month. Forms 501, 507 and 508 are due the 25th of each month for the prior month.
State Beer Barrel Tax ($5.50 per 31 gallon barrel) is due the 10th of each month for the preceding month -- West Virginia wholesalers to brewers/importers to Department of Tax and Revenue.
15th
Last day to file monthly Solid Waste Tax Report for the preceding month. Form SWA-1.
Last day to file monthly Cigarette Tax Report for the preceding month. Form 7.09.
Last day to file, report and pay monthly Soft Drinks Tax for the preceding month. Form 20.15.
Last day to file return and pay State Consumers Sales Tax due for the preceding month. Taxpayers whose collections are less than $50 per month have the privilege of filing quarterly returns, but quarters must end on March 31, June 30, September 30 and December 31.
Last day to file returns and pay direct-pay Consumers Sales and Use Tax due for the preceding month. For WV/CST-210 and WV/CST-230. Taxpayers whose tax liability is $100 or less per month must file a quarterly return. Quarters must end on March 31, June 30, September 30 and December 31.
Last day to pay Health Care Provider Tax returns. Taxpayers incurring a tax liability of more than $50 per month are required to file a monthly return.
20th
Last day for employers to remit for previous month Personal Income Tax which exceeds $100. If amount does not exceed $100, a quarterly form IT-101 return must be filed.
31st
Last day to file returns and pay tax on the Special 2-Cents a Ton Tax on Producers of Coal. Exception:
Tax that accrues for the month of May must be remitted each year by the 15th day of June rather than the 30th day of June.
Administrative Notice 99-18 --- Issued April 13, 1999 SUBJECT: Cigarette Tax - State Tax Commissioner’s Policy Statement concerning revisions in method of applying for reimbursement of cigarette tax for overpayment and/or returns of stamped cigarettes to manufacturers, revisions of reporting forms and Implementation of Tobacco Master Settlement Agreement, WV Code § 16-9B passed March 12, 1999; in effect from passage.
Administrative Notice 99-19 --- Issued April 28, 1999 SUBJECT: Notice of Adjusted Interest Rate on Tax Underpayments and Overpayments and on Public Contracts for the Period of July 1, 1999 through December 31, 1999.
SEPTEMBER, 1998 90-4639 RG - ISSUED 9/24/98 GASOLINE AND SPECIAL FUEL EXCISE TAX—UNTIMELY FILED CLAIM FOR REFUND—TAX COMMISSIONER WITHOUT AUTHORITY TO EXTEND STATUTORY PERIOD FOR FILING CLAIM FOR REFUND—The six-month statutory period for filing a claim for refund of gasoline and special fuel excise tax, W. Va. Code § 11-14-11(c), must be strictly applied and may not be extended for equitable reasons.
91-356 C & 91- 357 U - ISSUED 9/25/98 CONSUMERS SALES AND SERVICE TAX - BURDEN OF PROOF—Taxpayer carried the burden of proving that the audit used on erroneous amount for one month of the audit period.
PURCHASERS’ AND RETAILERS’ USE TAX—SEPARATION OF BUSINESS ACTIVITIES —Taxpayer which separates its business activities into those which are taxable versus those which are nontaxable is legally entitled to all exemptions applicable to each specific activity.
97-541 WS(R) - ISSUED 9/16/98 WITHHOLDING TAX—TAXPAYER'S BURDEN TO PROVE ENTITLEMENT TO REFUND—Under W. Va. Code § 11-10-9, a taxpayer must bear the burden of proving that it is entitled to a tax refund.
91-559 U - ISSUED 9/17/98 CONTRACTING—CONTRACTOR NOT PRODUCER OF NATURAL RESOURCES—Contractor which prepares well sites, builds roads, and lays pipe and reclaims site is not engaged in the production of natural resources pursuant to W. Va. Code § 11-15-2(t) and is therefore subject to use tax on all of its purchases for use in business.
CONTRACTING—NO REGULATION CHANGE BEFORE SEPTEMBER, 1990—Correspondence between the Department of Tax and Revenue and the Contractor's Association did not signal that a change was to take place regarding taxability of purchases for use in business by contractors.
CONTRACTING—RECLAMATION ACTIVITIES—Pursuant to 110 C.S.R. 15, § 8a(4)(1) taxpayers reclaiming well sites after production has ceased are exempt from the payment of use tax on purchases used to reclaim the site.
DOCKET NO. 92-527 N (On Appeal)
FILE NO. 55 057 4336 001CORPORATION NET INCOME TAX—UNTIMELY FILED CLAIM FOR REFUND DUE TO FEDERAL AUDIT CHANGES—A taxpayer may not offset an overpayment of West Virginia corporation net income tax for one tax year, resulting from federal audit changes, against an underpayment of such a tax for the next succeeding tax year, where the taxpayer did not timely file a claim for refund for the overpayment in accordance with W. Va. Code § 11-10-14(1)(1) or § 11-10-14(l)(4), whichever was applicable.
93-433 U & 93-434 C - ISSUED 9/17/98 CONSUMERS SALES AND SERVICE TAX—ROOM AND BOARD RENTALS—Pursuant to the provisions of 110 C.S.R. 15, § 8.1.1.3 the State Tax Commissioner will affirm as taxable for consumer sales and service tax purposes room and board rentals received by a professional person since the same represent a nonprofessional service being offered.
PURCHASERS' USE TAX—NONPROFESSIONAL SERVICES—EXPERT MEDICARE CONSULTANT—Not deemed to be professional and exempt from consumers sales and service tax in the absence of a required license, no required mastery of a specialized body of knowledge culminating in a formal degree from a college or university or being subject to recognized standards of performances.
PURCHASERS' USE TAX—NONPROFESSIONAL SERVICES— of a licensed nursing home administrator although listed in 110 C.S.R., 15, § 8.1.1.1 as professional, are not applicable here, since individual did not function as a licensed nursing home administrator but as an office administrator who also did marketing.
PURCHASERS' USE TAX—PURCHASES OF SUBSTANTIAL AMOUNTS OF TOP SOIL AND SPREADING SERVICES—Purchases of substantial amounts of top soil and spreading services constituted contracting and exempt from use tax where the purchase and spreading of the top soil resulted in a capital improvement to real property
PURCHASERS' USE TAX—ADVERTISING PURCHASES— of calendars from business supply company held not equivalent to preprinted advertising circulars and therefore exempt from use tax since calendars are equivalent to taxable poster boards and signs.
94-056 C & 94-057 FN - ISSUED 9/23/98 BUSINESS FRANCHISE TAX- - SUFFICIENT CONTACT — Petitioner’s admission that some of its employees do come into West Virginia to check on customers; that products are delivered into West Virginia by company trucks; and that Petitioner retains title to leased equipment being used in the State constitute sufficient contact or nexus for imposition of the West Virginia Business Franchise Tax.
CONSUMERS SALES AND SERVICE TAX—SUFFICIENT CONTACT TO REQUIRE TAX TO BE COLLECTED — A finding that the Petitioner is responsible for the payment of business franchise tax as a result of its sales and rental activities makes the Petitioner responsible for its failure to collect sales tax.
94-104 U - ISSUED 9/30/98 USE TAX—MANUFACTURING—Consistent with W. Va. Tax Dec. 94-304 U, persons who expose film, develop the film, make prints or diapositives and who make sales of those photography products to others are engaged in manufacturing for consumer sales and use tax purposes.
94-258 U & 95-259 U - ISSUED 9/17/98 PURCHASER'S USE TAX—PURCHASES OF OPTICAL AND AUDITORY ITEMS BY PRESCRIPTION—Pursuant to 110 C.S.R. 15, § 2.29 and 110 C.S.R. 15 § 62.3.3, no purchaser's use tax is due on the fair market value of optical and auditory items purchased and dispensed by a clinic to outside patients who come to the clinic with a prescription for those items from another person. In those circumstances the clinic is not using the optical and auditory items in rendering services, but is merely dispensing items pursuant to a prescription.
PURCHASERS' USE TAX—COMPUTER CONSULTING SERVICES— Pursuant to 110 C.S.R. 15, § 8.1, the tax division is authorized by the Legislature to designate a particular service as a professional service. The burden of proving that the service should be designated as a professional service is on the taxpayer. A medical clinic which fails to produce testimony or any other evidence in support of its contention that professional services were rendered by a computer consultant to the Petitioner has failed to carry its burden of proof as required by the Legislature.
PURCHASERS' USE TAX—PHYSICIAN RECRUITING SERVICES— No reduction in use tax assessment where medical clinic failed to carry its burden of proof that recruitment firm used its physician training to determine the qualifications of individual(s) to be hired rather than just interviewing candidates who met all qualifications.
PURCHASERS' USE TAX—APPORTIONMENT OF RECRUITMENT EXPENSES— No precedent, law or regulation provided by Petitioner that would allow a portion of a purchase to be apportioned or allocated based upon the amount of time expended or percentage of services performed in-state versus out-of-state.
PURCHASERS' USE TAX—MEMBERSHIP DUES—110 C.S.R. 15 § 52.5 provides that consumers sales and use tax does not apply to membership dues, separately stated which do no involve any charge for tangible personal property and/or services.
94- 378 U - ISSUED 9/30/98 PURCHASERS AND RETAILERS USE TAX - PURCHASES FOR DIRECT USE IN BUSINESS OF DISMANTLING SCRAP METAL - EXEMPT AS DIRECTLY USED IN "MANUFACTURING", WHERE THE CHARACTER OF THE METAL IS CHANGED - The State Tax Commissioner will abate that portion of a purchasers and retailers use tax assessment pertaining to purchases of machinery and supplies directly used in the business activity of dismantling scrap metal (e.g., railroad cars, motor vehicles, mining machines and household appliances), sorting and reforming the dismantled metal, and selling it to customers for other purposes. This activity constitutes "manufacturing" within the meaning of W.Va. C.S.R. § 110-15-2.46 and § 110-15-2.123.4.2 in light of the change in character of the metal.
Docket No. 95-004 C (On Appeal)
File No. 55 061 4332 001 – Issued 9/4/98CONSUMERS SALES AND SERVICE TAX—SALES OF SO-CALLED NUTRITIONAL "SUPPLEMENTS" NOT EXEMPT AS PRESCRIPTION DRUG SALES IF NOT USED FOR "MEDICAL PURPOSES"—Sales of nutritional "supplements" by a physician as part of a weight loss program for clients and patients are subject to consumers sales and service tax since the same are not exempt under W. Va. Code § 11-15-9(n) as "[s]ales of drugs dispensed upon prescription...to consumers for medical purposes[.]"
CONSUMERS SALES AND SERVICE TAX—NUTRITIONAL "SUPPLEMENTS" STATUTORILY TAXED FOR THE ENTIRE AUDIT PERIOD—Sales of nutritional supplements are taxable for audit periods prior to July 8, 1991 when 110 C.S.R., 15 § 75.1 et seq. became effective because regulation did not alter statutory language in W. Va. Code § 11-15-9(n) which required that sales of drugs disposed by prescription must be for medical purposes (not for nutritional needs).
CONSUMERS SALES AND SERVICE TAX—BURDEN OF PROOF—Taxpayer which alleged that exempt professional services were inadvertently treated as taxable sales but failed to prove which amounts were taxable and which amounts were exempt failed to prove that assessment was incorrect or invalid as required by W. Va. Code § 11-10-9.
95-037 U & 95-038 U - ISSUED 9/4/98 PURCHASERS' AND RETAILERS' USE TAX—BURDEN OF PROOF NOT MET—Petitioner's naked assertion that taxing authority assessed the wrong entry (service company) rather than marketing company without submission of any corroborating evidence, i.e. corporate charter, organization chart, etc. is not sufficient proof of untaxability required by W. Va. Code § 11-10-9 and therefore Tax Commissioner was legally justified in assessing service company since the same had sales representatives operating in the State of West Virginia and because Tax and Revenue, Publication TSD-370 makes direct reference to the taxability of samples distributed free of charge.
95-122 FN, 95-123 U, 95-124 N - ISSUED 9/22/98 PURCHASERS' AND RETAILERS' USE TAX—SUFFICIENT NEXUS—In-state consulting and repair work constitute sufficient nexus for imposition of the use tax.
CORPORATE NET INCOME TAX—NO BASIS FOR LIABILITY—Filing of amended corporate income tax returns showing no taxable income for the audit period mandates that the tax be set aside.
BUSINESS FRANCHISE TAX—SUFFICIENT NEXUS EXISTS—In-state consulting and repair work and delivery of products in its own vehicles and admission of use tax liability mandates imposition of the business franchise tax.
95-237 U & 95-238 C - ISSUED 9/4/98 PURCHASERS' AND RETAILERS' USE TAX—PAYMENTS TO SUBCONTRACTOR—Taxpayer's treatment of payments to subcontractor as being non-wage income coupled with admission that said payments were made pursuant to written and verbal contracts were insufficient to prove that payments were wages and that the assessment is incorrect and contrary to law under W. Va. Code § 11-10-9.
PURCHASERS' AND RETAILERS' USE TAX—END USER LIABLE—110 C.S.R. 15, § 107.2.4 provides that a contractor is the user or consumer of all tangible personal property and/or taxable services furnished to him or by him and therefore apartment complexes set up as limited partnerships are not liable for the tax as the recipient of those goods and services.
PURCHASERS' AND RETAILERS' USE TAX—Consumers sales and service tax statute requiring tax to be collected and use tax statute requiring tax to be paid, when read together, are not vague, ambiguous or uncertain, since the contractor, as the end user, is taxable on all such purchases of goods and services.
CONSUMERS SALES AND SERVICE TAX—FAILURE TO CAPITALIZE ITEMS—Realty company is subject to consumers sales and service tax for items repaired or maintained that were not capitalized on its books and records because it could not be determined what sales pertained to major repairs or replacements versus only maintenance services.
PURCHASERS' AND RETAILERS' USE TAX—LIABILITY OF USER—Under W. Va. Code § 11-15A-11 any person who uses any tangible personal property is responsible to pay use tax on transactions otherwise subject to sales tax when the sales tax was not collected or paid.
95-358 WS - ISSUED 9/16/98 WITHHOLDING TAX—TAXPAYER'S BURDEN OF PROOF TO SHOW ASSESSMENT INVALID —Under W. Va. Code § 11-10-9, the burden of proof is upon the taxpayer to show that a tax assessment is incorrect and contrary to law, in whole or in part. Accordingly, the State Tax Commissioner will abate a withholding tax assessment against a corporation where the corporation proves that the business operations attributable to it were in fact performed by a taxpayer other than the corporation.
95-364 U - ISSUED 9/22/98 PURCHASERS’ AND RETAILERS’ USE TAX— BURDEN OF PROOF NOT MET — As a result of the Petitioner’s failure to prove that the assessment is incorrect or contrary to law in whole or in part as required by W. Va. Code § 11-10-9, the assessment must be affirmed.
95-469 (R) - ISSUED 9/16/98 WEST VIRGINIA PERSONAL INCOME TAX — ADDITIONS TO TAX FOR FAILURE TO PAY TAX SHOWN AS DUE ON RETURN—The State Tax Commissioner will not waive additions to the tax for failure to pay the amount shown as tax due the State, where the taxpayer failed to request an extension and installment payment plan in writing, stating the reasons therefor. The mere submitting of such requests by telephone, without more, does not excuse the taxpayer from his obligation to make timely payment of his tax debt.
WEST VIRGINIA PERSONAL INCOME TAX — TAXPAYER'S BURDEN OF PROOF FOR WAIVER OF ESTIMATED TAX "PENALTY" — Under W. Va. Code § 11-10-18a (e)(3), a taxpayer seeking a waiver of the "penalty" for underpayment of estimated tax must show "casualty, disaster or other unusual circumstances" such that nonwaiver of the "penalty" would be "against equity and good conscience". Taxpayer's excuse, that he was unemployed at the time and that he submitted an oral request for payment plan to the Tax Department, does not constitute such "unusual circumstances".
96-014 U(R) - ISSUED 9/22/98 PURCHASERS' USE TAX—NOT FOR RESALE—Purchases of truck washing materials and truck washing equipment repair services by truck washing business are taxable as purchases for use or consumption in business, pursuant to W. Va. Code § 11-15A-2, and are not exempt as purchases for resale, since the items after use did not remain tangible personal property and the same were never possessed by the customers
96-098 CS - ISSUED 9/21/98 CONSUMERS SALES AND SERVICE TAX—HOME INSPECTION SERVICES NOT PROFESSIONAL—The activities of a taxpayer who provided home inspection services to lending institutions are not considered "professional" services for purposes of the consumers sales and service tax exception. Whether a service is professional is determined on a case-by-case basis by considering the amount of education required for the service, the nature and extent of nationally recognized standards for performance, licensing requirements, and continuing education requirements. The home inspection services furnished by the taxpayer involved examination of homes and filing of reports pertaining to the deficiency, if any, in the structure and certifying the condition of all major systems, including plumbing, heating and roofing. Other than the construction background and experience, the lending institutions do not require home inspectors to be licensed on the state and national level. Nor does the job of home inspector require continuing education or maintenance of nationally recognized standards of performance. As such, the taxpayer was found liable for its failure to collect and remit the consumers sales and service tax on fees charged on account of home inspection services.
96-285 PS - ISSUED 9/30/98 PERSONAL INCOME TAX—INTEREST—ABATEMENT BECAUSE OF ERRORS BY AN EMPLOYEE OF THE TAX DIVISION—Pursuant to W. Va. Code § 11-10-7b, the Tax Commissioner is authorized to abate interest attributable to errors caused by an employee performing official duties.
96-305 C - ISSUED 9/30/98 CONSUMERS SALES AND SERVICE TAX — CORPORATE OFFICER LIABILITY — BURDEN OF PROOF FOR PERIODS PRIOR TO MAY 1, 1992 — For periods prior to May 1, 1992, an officer of a corporation is personally liable for the unpaid consumers sales and service tax liability of the corporation, unless the officer shows that he or she did not have the authority to make or to supervise directly the day-to-day financial decisions on behalf of the corporation.
CONSUMERS SALES AND SERVICE TAX — CORPORATE OFFICER LIABILITY FOR PERIODS AFTER APRIL 30, 1992 — For periods covered by the new, legislatively approved consumers sales and service tax regulations on point which became effective on May 1, 1992, an officer of a corporation is personally liable for the unpaid consumers sales and service tax liability of the corporation by virtue of his or her status as an officer with any managerial duties, whether or not the officer had the authority to make or to supervise directly the day-to-day financial decisions on behalf of the corporation. See 110 C.S.R. 15, §§ 4a.5 & 4a.5.2, 1 W. Va. St. Tax Rep. (CCH) para. 63-789; see also W. Va. Code § 64-7-6(rr) (1992).
CONSUMERS SALES AND SERVICE TAX — CORPORATE OFFICER LIABILITY — OFFICER MAY NOT CHALLENGE LIABILITY OF CORPORATION WHICH HAS BECOME FINAL — In a W. Va. Code § 11-15-17 administrative proceeding against a corporate officer to collect a corporation’s consumers sales and service tax liability, the corporate officer may not challenge the liability of the corporation which has become final, such as by raising the statute of limitation defense of the corporation, and this rule applies even if the corporate officer did not personally receive formal notice of the corporation’s liability at the same time the corporation was assessed.
CONSUMERS SALES AND SERVICE TAX — CORPORATE OFFICER LIABILITY — TIME LIMITATION ON ASSESSMENT AGAINST OFFICER — Under the legislatively approved regulation set forth in 110 C.S.R. 15, § 4a.7.1 (May 1, 1992), 1 W. Va. St. Tax Rep. (CCH) para. 63-793, see also W. Va. Code § 64-7-6(rr) (1992), the time period for assessing a corporate officer to collect the unpaid consumers sales and service tax liability of the corporation is five years from the date the tax liability of the corporation becomes final. Under the 1993 amendment to W. Va. Code § 11-10-16, the time period for this collection proceeding against the corporate officer is now ten years for corporate consumers sales and service tax liabilities which become final after the effective date of the 1993 amendment to W. Va. Code § 11-10-16.
97-114 U & 97-064 RC - ISSUED 9/17/98 PURCHASERS' USE TAX—TRANSPORTATION FEES—Fees paid to contractor to deliver vehicles from points in W. Va. to points outside the state; from points outside the state back to West Virginia and from origination points outside the state to other destinations outside the state are not considered tax exempt as purchases for resale as are other dealer preparation costs because delivery services take place irrespective of whether vehicles are ever sold and the flat fee rate is not based upon the retail price of vehicles.
PURCHASERS' USE TAX—NO APPORTIONMENT OF SERVICE REQUIRED—Since delivery fees are incurred prior to any sale taking place and therefore constitute a service used in the taxpayer's retail business, no apportionment of service required since service totally takes place in this State.
PURCHASERS' USE TAX—PRIOR LETTER RULINGS—Letter ruling issued in 1992 concerning what types of purchases are exempt as purchases for resale and which types are taxable as purchases for use in business are not controlling in this case because transportation fees take place independent of the retail sale of the vehicles.
97-541 WS(R) - ISSUED 9/16/98 WITHHOLDING TAX—TAXPAYER'S BURDEN TO PROVE ENTITLEMENT TO REFUND—Under W. Va. Code § 11-10-9, a taxpayer must bear the burden of proving that it is entitled to a tax refund.
97-685 C & 97-686 C - ISSUED 9/23/98 CONSUMERS SALES AND SERVICE TAX — TAXABLE REPAIRS OF DENTAL PROSTHESES — As set forth in Technical Assistance Advisory No. 94-006 (stated therein to be of precedential value), when the true object of a W. Va. Code § 30-4-2a work order is for a service, including a repair, of a dental prosthesis, the exemption provided by W. Va. Code § 11-15-9(n) [now, W. Va. Code § 11-15-9(a)(11)], does not apply because that exemption is limited to sales of tangible personal property which are drugs as defined by W. Va. Code 11-15-2(f).
CONSUMERS SALES AND SERVICE TAX — MISINTERPRETATION OF TECHNICAL ASSISTANCE ADVISORY — The State Tax Commissioner is not bound by a private party’s misinterpretation, or a state tax examiner’s misinterpretation, of a Technical Assistance Advisory.
98-009 & 98-010 U - ISSUED 9/30/98 CONSUMERS SALES AND SERVICE TAX AND PURCHASERS’ USE TAX — UNTIMELY FILED PETITIONS FOR REASSESSMENT — Untimely filed petitions for reassessment must be dismissed, as the State Tax Commissioner is without explicit or implicit statutory authority to extend, for any reason, the sixty-day period set forth in W. Va. Code § 11-10-8(a) for filing such petitions.
OCTOBER, 1998 95-176 C - ISSUED 10/30/98 CONSUMERS SALES AND SERVICE TAX—NONPROFESSIONAL MUSICIAN SERVICES—Pursuant to 110 C.S.R. 15, § 8.1, the Tax Division is authorized by the Legislature to designate a particular service as a professional service using criteria mandated by the Legislature. Musicians and musical groups do not require a state or federal license to perform, do not require mastery of a specialized body of knowledge culminating in a formal degree from a college or university, are not subject to nationally recognized standards of performance and are not required to participate in continuing education in order to maintain a license. Accordingly, musicians and musical groups are not performing professional services for consumers sales and service tax purposes.
CONSUMERS SALES AND SERVICE TAX—MUSICIAN SERVICES PURCHASED BY HOTELS ARE NOT DEEMED TO BE RESOLD—Since 110 C.S.R. 15, § 33.4.5 requires that, for the purchase of a service to be resold, there must be an initial contract to perform the service, a hotel which did not contract with customers to provide entertainment is not considered as having subcontracted those services to musicians or musical groups.
CONSUMERS SALES AND SERVICE TAX—RESALE EXEMPTION NOT APPLICABLE—The fact that a hotel cannot in and of itself play music or that musicians do not play unless someone is there to watch does not mean that the resale exemption is applicable.
ADM. DEC. 97-080 RM - ISSUED 10/2/98 MOTOR CARRIER ROAD TAX—VEHICLES WITH TWO AXLES NOT CONSIDERED MOTOR CARRIERS—The State Tax Commissioner will affirm a motor carrier road tax assessment issued against a taxpayer who overreported its motor carrier road tax refund on gasoline and special fuel consumed on highways within this state in vehicles having not more than two axles. Such vehicles having not more than two axles did not fall within the definition of "motor carrier" or "truck" under W. Va. Code § 11-14A-2(7) and § 11-14A-2(18) during the assessment period.
ADM. DEC. 97-423 U - ISSUED 10/4/98 PURCHASERS' AND RETAILERS' USE TAX—PURCHASES FOR DIRECT USE IN THE MANUFACTURE OF AUTOMOBILE TRANSMISSIONS—EXEMPT AS DIRECTLY USED IN MANUFACTURING, WHERE THE CHARACTER OF METAL IS CHANGED—The rebuilding, refurbishing and repairing of automobile transmissions is treated as a service for purposes of the sales and use tax except that any activity by the taxpayer actually fabricating resulting in the manufacture or machining certain parts from raw materials of a part is manufacturing and the purchase of tangible personal property directly used in the manufacturing activities is exempt from sales and use tax.
ADM. DEC. 97-468 HP - ISSUED 10/14/98 HEALTH CARE PROVIDER TAX—INTEREST—Pursuant to W. Va. Code § 11-10-7b(b), the interest for periods prior to the date of demand for repayment of an erroneously granted refund is ABATED.
Docket No. 97-665 SVHP (On Appeal) - PRIVILEGE TAX ON CERTAIN HEALTH CARE PROVIDERS—The language imposing a privilege tax on certain healthcare providers is clear and unambiguous. The clear language authorizes the Auditing Division to enforce, through assessment, the imposition of tax on the gross receipts of the Petitioner for providing nonmedical healthcare related services.
ADM. DEC. 98-088 C - ISSUED 10/4/98 CONSUMERS SALES AND SERVICE TAX — GROUP TOUR ARRANGER — TAX DUE ON SO-CALLED “GROSS PROFIT” — A person who arranges and sells group tours — whether a “travel agent” or a “group tour operator/promoter” — must ordinarily collect consumers sales and service tax on the so-called “gross profit,” that is, on the gross sales price of the packaged tour less the direct expenses paid by the group tour arranger for the travel, food, lodging, entertainment, and the like, including deducting the sales tax already paid by the arranger on these items at the time of purchase by the arranger. See 110 C.S.R. 15, § 81.2 (1992), 1 W. Va. St. Tax Rep. (CCH) para. 64-473; Taxpayer Services Division Publication No. 376 (rev. Apr., 1993) (“Sales and Use Tax and Travel Agents,” “Packaged Tours” section thereof).
CONSUMERS SALES AND SERVICE TAX — ABATEMENT OF INTEREST FOR STATE TAX DIVISION ERROR — Pursuant to the provisions of W. Va. Code § 11-10-7b(a)(1), the interest portion of a state tax assessment will be abated when the tax deficiency was attributable, in whole or in part, to an error or delay caused by an officer or employee of the State Tax Division in performing a ministerial act, such as assigning a business classification code which causes the taxpayer in good faith, but mistakenly, to believe that certain tax laws do not apply to the taxpayer’s type of business as classified by the State Tax Division.
CONSUMERS SALES AND SERVICE TAX — FAILURE TO PROVE UNCREDITED REMITTANCES — The State Tax Commissioner will affirm a consumers sales and service tax assessment when the taxpayer fails to prove that it made remittances for which credit has not been given.
NOVEMBER, 1998 ADM. DEC. 94-252 SV - ISSUED 11/5/98 SEVERANCE TAX—”PRODUCER” v. “CONTRACT MINER”—”PRODUCER” MUST HAVE “ECONOMIC INTEREST”—The State Tax Commissioner will abate a severance tax assessment which involves the services of a “contract miner,” not the activities of a natural resource “producer,” in that the person assessed, specifically, the person physically producing the natural resource product, did not have an “economic interest” in the mineral in place or in the standing timber. 110 C.S.R. 13A, §§ 3.5.1, 2.4.1 (1992), 1 W. Va. St. Tax Rep. (CCH) paras. 45-548, 45-511.
ADM. DECS. 96-027 FS & 96-028 U - ISSUED 11/25/98 BUSINESS REGISTRATION TAX—NOT APPLICABLE TO HORSE TRAINERS—Both W. Va. Code §§ 19-23-12 and 11-12-2(b)(H) exclude licensed horse trainers from the imposition of the business registration tax.
PURCHASERS' USE TAX—HORSE TRAINERS NOT EXEMPT—Purchasers' use tax applies to horse trainers who purchase tangible personal property and/or services which are used in the rendering of horse training services.
PURCHASERS' USE TAX—AGRICULTURAL PRODUCT EXEMPTION NOT APPLICABLE—110 C.S.R. 15, § 2.16, the exemption from sales and use taxes for those engaged in the commercial production of an agricultural product, does not encompass horse training.
PURCHASERS' USE TAX—PERSONAL AND PROFESSIONAL SERVICE EXEMPTIONS NOT APPLICABLE—Legal responsibility to pay purchasers' use tax with respect to one's purchases is not altered by taxpayer's claim that its own services were of a personal or professional nature.
ADM. DECS. 98-198 CS & 98-199 WS - ISSUED 11/25/98 CONSUMERS SALES AND SERVICE TAX— WITHHOLDING TAX—PERSONAL LIABILITY—Pursuant to W. Va. Code §§ 11-10-19(a), 11-15-17 and 110 C.S.R. 15, § 4.a.5, Petitioners who acted and assumed roles as officers in a corporation are personally, jointly and severally liable for the failure of the corporation to collect and remit trust fund taxes (sales and withholding) to the State of West Virginia.
CONSUMERS SALES AND SERVICE TAX—WITHHOLDING TAX—NOT COMPARABLE TO CRIMINAL LAW—Failure of state taxing authority to advise Petitioners that sale of business may result in tax consequences is not comparable or equivalent to the criminal law where law enforcement officials must give Miranda warning to those taken into custody.
CONSUMERS SALES AND SERVICE TAX—WITHHOLDING TAX—NO ESTOPPEL—Failure of tax authority to advise Petitioners about tax consequences of asset sale or to advise them that Tax Department must be party to buy/sell agreement in order to have its rights adjudicated does not estop the Department from bringing personal liability assessments against responsible officers since the doctrine of estoppel is not to be applied to the state or its political subdivisions in such instances.
CONSUMERS SALES AND SERVICE TAX—WITHHOLDING TAX—NO DENIAL OF DUE PROCESS—Tax hearing held (6) months after petitions for reassessment were filed and was continued only once after the hearing was originally set did not deny Petitioners' their due process rights to a timely hearing, especially where the Petitioners made no showing that the one continuance adversely affected the same.
CONSUMERS SALES AND SERVICE TAX—WITHHOLDING TAX—SALE OF BUSINESS NO BAR TO ASSESSMENTS—Verbal agreement between the Petitioners and the purchaser of the business that purchaser would continue to make tax payment plan remittances does not in anyway affect the right of the Tax Department to bring personal liability assessments against responsible corporate officers.
DECEMBER, 1998 ADM DEC - 98-085 C - ISSUED 12/11/98 CONSUMERS SALES AND SERVICE TAX—BURDEN OF PROOF NOT MET—Petitioner who claimed that sales tax assessment was previously handled by Compliance Division of the Tax Department but could not produce any documentary evidence or witnesses to corroborate same did not meet burden of proof standard pursuant to W. Va. Code § 11-10-9.
SANITIZED DECS. 98-333 WS & 98-334 WS - ISSUED 12/11/98 WITHHOLDING TAX-LIABILITY FOR MONEY PENALTY NOT SHOWN—Although both Petitioners had check signing authority and did in fact sign checks made payable to the Tax Department, neither one is culpable individually under W. Va. Code § 11-10-19(a) since the plain language of the statute requires that the officer be both (1) "required" to collect, account for and pay over said tax, meaning to supervise directly the day to day financial operations of the company and (2) to have "willfully" failed truthfully to collect, account for, and pay over the tax prior to the money penalty being assessed, reporting to have had actual knowledge of the company's default to pay the tax or recklessly ignored obvious financial facts which could have been discerned with only a cursory inquiry.
Taxpayer Services Division
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