Did owning and renting residential property make a Virginia taxpayer liable for litter tax?

Plain-English summary

Virginia held that the residential rental-property owner did not owe litter tax. The annual tax applied to manufacturers, wholesalers, distributors, and retailers of listed products, including food, tobacco, beverages, paper products, containers, cleaning products, toiletries, and motor-vehicle parts.

The taxpayer owned and rented residential property but did not produce or sell any covered product. Virginia therefore abated the 2010 assessment.

The taxpayer had also filed and paid litter tax for 2009. Because that payment was erroneous and the refund claim was within the three-year period in Va. Code § 58.1-1823, Virginia said a refund would be issued.

Common questions

Q: Does every Virginia business owe litter tax?
A: No. The ruling limited it to specified business roles involving products listed in the statute.

Q: What happened to the prior year's payment?
A: Virginia granted a refund because the taxpayer was not liable and the claim was timely.

Citations and references

• Va. Code §§ 58.1-1707, 58.1-1708, and 58.1-1823.

Subject

Taxpayer is not liable for litter tax

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-13

Original ruling text

March 2, 2012

Re: § 58.1-1821 Application: Litter Tax

Dear *:

This reply is in response to your letter submitted on behalf of * (the "Taxpayer"), in which you request correction of the litter tax assessment issued for the period January 2010 through December 2010. I apologize for the delay in responding

to your letter.

FACTS

The Taxpayer owns and rents residential property. The Taxpayer filed a litter tax return and paid the tax for the period January 2009 through December 2009. In May 2011, the Taxpayer received a Notice of Assessment of litter tax from the Department for the period January 2010 through December 2010.

The Taxpayer protests the assessment and contends that it neither operates a business nor sells the products that would require it to pay the tax. Accordingly, the Taxpayer requests abatement of the assessed litter tax and a refund of the litter tax it believes it paid in error.

DETERMINATION

Virginia Code § 58.1-1707 imposes an annual litter tax on all manufacturers, wholesalers, distributors or retailers of the products enumerated in Va. Code § 58.1-1708 for each establishment from which these businesses are conducted.

Virginia Code § 58.1-1708 provides that the litter tax is imposed on manufacturers, wholesalers, distributors and retailers of food for human or pet consumption; groceries; cigarettes and tobacco products; soft drinks and carbonated waters; beer and other malt beverages; wine; newspapers and magazines; paper products and household paper; glass containers and metal containers or plastic or fiber containers made of synthetic material; cleaning agents and toiletries; nondrug drugstore sundry products; distilled spirits; and motor vehicle parts.

Based on the foregoing, the Taxpayer is not liable for litter tax as it does not produce or sell the products enumerated in Va. Code § 58.1-1708. Accordingly, I agree that the Taxpayer paid the litter tax erroneously for 2009 and is not liable for the additional tax for 2010. As a result, the tax assessment for 2010 will be abated.

Virginia Code § 58.1-1823 authorizes the refund of any tax administered by the Department within three years from the date such tax was paid. Accordingly, the Taxpayer is entitled to a refund for the erroneously remitted litter tax for 2009. The Taxpayer should expect a refund shortly.

The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. If you have any questions about this determination, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1-4835485548.M