Were converted restaurant sales-tax assessments removed after zero returns showed the business was inactive?

Plain-English summary

Virginia closed the appeal in the former restaurant owner's favor. The business had been assessed because it did not file sales and use tax returns for May 2014 and July 2014 through April 2015, and those liabilities were converted to the owner.

After the appeal was filed, the restaurant submitted returns reporting no income for the disputed periods. Virginia processed the returns, reversed the restaurant's assessments, discharged the converted assessments against the owner in full, and closed all Virginia tax accounts for the restaurant.

Common questions

Did the ruling decide responsible-officer liability principles? No. The underlying business assessments were reversed after the missing returns showed no income, which eliminated the converted liabilities.

Was any further action required? No. The ruling says the appeal and accounts were closed.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-93

Original ruling text

May 21, 2018

Re: § 58.1-1821 Application: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the “Taxpayer”) in which you seek correction of the converted assessments issued for the periods May 2014 and July 2014 through April 2015. I apologize for the delay in responding to your appeal.

FACTS

The Taxpayer previously owned * (the “Restaurant”). For the period at issue, the Restaurant was issued assessments by the Department because sales and use tax returns were not filed by the Restaurant. On April 20, 2017, the Taxpayer was issued a consolidated bill notice from the Department, showing that the underlying assessments to the Restaurant had been converted to the Taxpayer. The Taxpayer subsequently received a notice of intent to lien from the Department regarding the converted assessments.

The Taxpayer contends the converted assessments are incorrect. The Taxpayer states that the Restaurant was no longer in business during the periods at issue, and the Restaurant did not have income for those periods. The Taxpayer states that the Restaurant has been inactive for several years, and it was believed that all necessary documentation had been filed with the Department to close the Restaurant's accounts. The Taxpayer requests that the converted assessments be abated in full.

DETERMINATION

Since filing the appeal contesting the converted assessments, sales and use tax returns have been filed by the Restaurant for the periods at issue. The returns filed show no income for the periods in which the assessments had been issued to the Restaurant. Upon review and processing of the returns by the Department, the assessments at issue have been reversed. Additionally, the converted assessments issued to the Taxpayer have been discharged in full. Further, all Virginia tax accounts for the Restaurant have been closed. The converted assessments have been discharged, and no further action is required by the Department. This letter serves to close the appeal filed on behalf of the Taxpayer.

If you have any questions about this response, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/1391.P