Current through Register Vol. XLI, No. 38, September 20, 2024
4.1. Collection by Vendor. - Each vendor
shall collect from the purchaser the consumers sales and service tax levied and
imposed upon each sale of tangible personal property and service in West
Virginia before or at the time such tax accrues. Such tax shall be added to and
constitute a part of the sales price. The vendor shall keep the amount of tax
collected separate from the proceeds of sale exclusive of the tax unless
authorized in writing by the Tax Commissioner to keep such amount of tax in a
different manner. Where such authorization is given, the State's claim shall be
enforceable against and shall take precedence over all other claims against the
moneys commingled.
4.1.1. Persistent failure
by any vendor to keep the amount of tax collected separate from the proceeds of
sale exclusive of the tax shall be reason for, and good cause for, the Tax
Commissioner at his discretion to revoke the business registration certificate
of such vendor issued under W. Va. Code '11-12-1 et seq. or to
refuse to renew the said business registration certificate, or both.
4.2. Collection by Retailer. -
Every retailer engaging in business in this State and making sales of tangible
personal property or taxable services for delivery into this State, or with
knowledge, directly or indirectly, that the property or services are intended
for use in this State, shall at the time of making such sales, whether within
or without the State, collect the use tax before or at the time such tax
accrues from the purchaser and give to the purchaser a receipt therefor with
the tax separately stated thereon.
4.2.1.
Foreign Retailers. - The Tax Commissioner may, in his discretion and upon
application, authorize the collection of the use tax by any retailer not
engaging in business within this State, who, to the satisfaction of the Tax
Commissioner, furnishes adequate security to insure collection and payment of
the tax. Such retailer may then be issued, without charge, a permit to collect
the tax in the manner prescribed by the Tax Commissioner. When so authorized,
it shall be the duty of such retailer to collect the use tax upon all tangible
personal property or taxable service sold to his knowledge for use within this
State, in the same manner and subject to the same requirements as a retailer
engaging in business within this State. Such authority and permit may be
canceled when, at any time, the Tax Commissioner considers the security
inadequate, or that such tax can more effectively be collected from the person
using such property in this State.
4.3. Exceptions to Collection Requirements. -
Notwithstanding Sections 4.1 and 4.2 of these regulations, no consumers sales
and service tax and no use tax need be collected by the vendor or retailer with
respect to a transaction if any one of the following conditions is satisfied:
4.3.1. The transaction is exempt per se from
tax pursuant to Section 9.2 of these regulations.
4.3.2. The purchaser signs and presents to
the vendor or retailer a current and complete exemption certificate or material
purchase certificate issued by the Tax Commissioner and the vendor or retailer
accepts such certificate in good faith.
4.3.3. The purchaser gives to the vendor or
retailer a current direct pay permit number: Provided, That the transaction is
not a sale of food.
4.4.
Accrual of Tax Liability Respecting Certain Sales and Services. - This Section
specifies the time at which the consumers sales and service tax and use tax
liability with respect to the sale of tangible personal property or rendering
taxable services becomes a legal liability of the vendee.
4.4.1. Cash, Credit, Conditional Sales. - On
cash sales, the tax accrues at the consummation of the sale. On credit sales,
the tax accrues upon transfer of possession of the property sold, but is
payable by the vendee on or before the thirtieth (30th) day subsequent thereto.
On conditional sales, where possession is delivered to the purchaser and title
is retained by the seller, the tax accrues upon transfer of possession of the
property sold, but is payable by the vendee on or before the thirtieth (30th)
day subsequent thereto. When tangible personal property is held or laid away by
the vendor or retailer pending payment of all or part of the purchase price,
the tax accrues upon delivery of the property sold to the purchaser or, if an
unpaid balance remains at such time, the sale shall be treated as a credit
sale.
4.4.2. Leases. -
Notwithstanding Section 4.4.1 of these regulations, if the sale is a lease,
each rental payment is the "monetary consideration" or "purchase price" and
constitutes a separate sale transaction upon which the tax is imposed. The tax
upon such payment accrues on the date such rental payment is actually received.
Where the lessee exercises an option to purchase the leased tangible personal
property, the tax accrues at the time of the payment of the remaining portion
of the purchase price.
4.4.3.
Services. - The tax on sales of taxable services accrues upon the payment of
the consideration for performance of the service, without regard to the actual
time of such performance.
4.5. Liability of Seller. - The amount of
consumers sales and service tax and use tax required to be collected by any
vendor or retailer is deemed to be held in trust for the State of West
Virginia, and any such tax required to be collected shall constitute a debt
owed to this State. If any vendor or retailer fails to collect the consumers
sales and service tax or use tax required to be collected, such vendor or
retailer shall be personally liable for the amount it failed to collect. If any
vendor or retailer fails to remit to the Tax Commissioner any consumers sales
and service tax or use tax collected in accordance with Section 5 of these
regulations, such vendor or retailer shall be personally liable for the amount
it so failed to remit and applicable interest, additions to tax and penalties,
and shall be subject to applicable criminal sanctions as provided by
law.
4.6. Absorbing Tax; Criminal
Penalty. - It shall be unlawful for any vendor or retailer engaging in business
in this State to advertise, hold out or state to the public or to any
purchaser, consumer or user, directly or indirectly, that the consumers sales
and service tax or the use tax or any part thereof will be assumed or absorbed
by the vendor or retailer or that it will not be added to the selling price of
the property sold, or if added that it or any part thereof will be refunded.
Any person violating any of the provisions of this Section within this State
shall be guilty of a misdemeanor and subject to the penalties provided in W.
Va. Code '11-9-7.
4.6.1. There are transactions where the sales
price includes the consumers sales and service tax: such as movie tickets,
admission fees or food at a ball game. The following rules apply in such
situations.
4.6.1.1. The ticket must have
printed on it either the sales price, with the amount of tax indicated, or the
phrase "West Virginia consumers sales and service tax included in the price of
this ticket," or a substantively similar phrase. Tickets may be sold under
Section 4.6.1.2 of these regulations with permission of the Tax
Department.
4.6.1.2. In those
instances where food or other items are sold, a sign of sufficient size to
allow a person of normal vision to read it from a distance of twenty (20) feet
must be posted in plain view, such sign to have printed upon it the following
phrase: "West Virginia consumers sales and service tax is included in the sales
price of these goods and services," or a substantively similar
phrase.
4.6.2. In those
instances where the sales price includes the consumers sales and service tax,
the vendor or retailer must use the following formula when calculating the
amount of consumers sales and service tax due on each sale, and he must then
remit the amount so calculated.
4.6.2.1. The
method for determining the amount of consumers sales and service tax to be
collected is to divide the total amount received by 1.06 and multiply that
amount by .06 with the resulting amount rounded to the next higher cent being
the amount collected on the sale.
4.6.2.2. Example: A hot dog sells for $1.00
at the ballpark.
Total amount purchase price
received ($1.00)/1.06 = ($.94)
Purchase price ($.94) X .06 = sales tax ($.056 carried to the
next higher number - $.06)
4.7. Accrual of Tax Respecting Certain Uses.
- This section specifies the time at which tax "accrues" with respect to the
use of tangible personal property or taxable services in West Virginia in
situations where the tax did not accrue pursuant to Section 4.4 of these
regulations.
4.7.1. Out-of-State Purchase. -
Where a person uses in this State tangible personal property or taxable
services purchased outside this State and the tax has not yet accrued, the use
tax accrues when the purchaser first uses such property or service in this
State when such use or consumption is not exempt from tax pursuant to Section 9
of these regulations.
4.7.2.
Integrated Manufacturer or Natural Resources Producer. - Where a person
exercising the privilege of producing for sale, profit or commercial use, any
natural resources, product or manufactured product and engages in a business or
activity in which such natural resource, product or manufactured product is
used or consumed by such person and such use or consumption is not exempt from
tax under Section 9 of these regulations, the use tax accrues when such person
first uses or consumes such product in this State in such a manner that is not
exempt from tax under said Section 9.
4.8. Liability of Purchaser or User. - Every
purchaser is and remains personally liable for the consumers sales and service
tax levied and imposed and every person using tangible personal property or
taxable services in West Virginia is and remains personally liable for use tax
levied, imposed and accrued until and unless any one of the following
conditions is satisfied:
4.8.1. The purchaser
pays the full amount of tax to the vendor or retailer at the time the liability
accrues.
4.8.2. The transaction
pursuant to which the tax accrued is exempt per se from tax pursuant to Section
9.2 of these regulations.
4.8.3.
The purchaser signs and presents to the vendor or retailer a current and
complete exemption certificate or material purchase certificate issued by the
Tax Commissioner and the purchaser uses the tangible personal property or
services in a manner consistent with the exemption asserted on such certificate
and such exemption is found in Section 9.3 of these regulations.
4.8.4. The purchaser or user holds a current
direct pay permit number issued by the Tax Commissioner to the purchaser or
user and the purchaser or user complies with Section 9c of these regulations by
timely and accurately filing, reporting and remitting the amount of tax accrued
for such purchase or use after taking into account exemptions from tax
specified in Section 9 of these regulations.
4.8.5. The person using tangible personal
property or taxable services in West Virginia complies with Section 5 by timely
and accurately filing, reporting and remitting the amount of tax accrued for
such use after taking into account exemptions from tax specified in Section 9
of these regulations.
4.9. Liability of Successor. - If any person
sells out his or its business or stock of goods, or ceases doing business, any
tax, additions to tax, penalties and interest shall become due and payable
immediately and such person shall, within thirty days after selling out his or
its business or stock of goods or ceasing to do business, make a final return
or returns and pay any tax or taxes which may be due; and, the unpaid amount of
any such tax shall be a lien upon the property of such person. The successor in
business of any person who sells out a business or stock of goods, or ceases
doing business, shall be personally liable for the payment of tax, additions to
tax, penalties and interest unpaid after expiration of the thirty (30) day
period allowed for payment by the predecessor.
4.9.1. The term "successor" is defined in
Section 2 of these regulations to mean any person who directly or indirectly
purchases, acquires, or succeeds to the business or the stock of goods of any
person quitting, selling, or otherwise disposing of a business or stock of
goods. The purchase or acquisition of a business may give rise to successor
liability whether the consideration is money, property, assumption of
liabilities or cancellation of indebtedness.
4.9.2. The liability of a successor arises
from any sale, transfer, assignment or other acquisition of a business or stock
of goods. A person who purchases or acquires a portion of a business or stock
of goods may become liable as a successor where he purchases or acquires
substantially all of the business assets or stock of goods of such business. If
two or more persons purchase or acquire a business or stock of goods, their
liability as successor is in proportion to the value of the business assets or
stock of goods acquired by each person.
4.9.3. The business assets include all assets
of a business pertaining directly to the conduct of the business. Business
assets include real property or any interest therein; tangible personal
property, including fixtures, equipment, machinery, furniture and vehicles; and
intangible property, including accounts receivable, contracts, business name,
business goodwill, customer lists, delivery routes, patents, trademarks or
copyrights. Any asset owned by a corporation is a business asset. "Stock of
goods" means the inventory or merchandise that the taxpayer is in the business
of selling, but does not include fixtures, equipment, machinery or vehicles
used in connection with such business.
4.9.4. If any taxpayer operates more than one
business, each at separate locations, and each location being required to have
a separate business registration certificate, each business location is a
separate business and has a separate stock of goods and separate business
assets for purposes of determining successor liability. The cessation of
business at any one location, or the sale of the business assets or stock of
goods of any one location, may result in successor liability. A successor of
the business or stock of goods of any business location is subject to liability
as a successor with respect to the tax attributable to that location even if he
does not purchase the business or stock of goods of all the
locations.
4.9.5. The change in the
form of a business will generally give rise to successor liability. A change in
the form of a business would include changes such as the incorporation of a
sole proprietorship or partnership, the voluntary or involuntary dissolution of
a corporation, the merger or consolidation of two or more corporations, the
formation of a partnership from one or more sole proprietorships or
corporations.
4.9.6. Successor
liability does not arise in connection with sales or transfers pursuant to:
assignments for the benefit of creditors, deeds of trust, security interests,
conditional sales, statutory liens, or judgment liens; or sales or transfers by
personal representatives, executors, administrators, receivers, trustees, or
any public officer in the course of his official duties, unless the previous
owner receives purchase money from the transfer or sale. Any business operated
under Title 11 of the United States Code, which is purchased or acquired by
another person, shall not give rise to successor liability.
4.9.6.1. If a business or stock of goods is
voluntarily sold or transferred to a creditor, and the creditor operates the
business, the creditor is a successor. If the creditor does not operate the
business or operates the business in liquidation with the sole purpose to
recover its debt, the creditor is not a successor.
4.9.7. The purchaser of the business or stock
of goods in an arms-length transaction will be released from liability if he
withholds from the purchase price an amount sufficient to cover the tax
liability of the seller or former owner, and pays such liability in full,
including all applicable penalties, additions to tax and interest or if the
seller obtains a certificate from the Tax Department stating that no taxes are
due from the seller or former owner. Purchase price is not limited to cash
transferred to the seller, but includes any consideration flowing directly or
indirectly to a seller.
4.9.7.1. The
requirement to withhold does not necessarily mean to retain or hold physical
assets, but means dealing with the purchase consideration in such a manner as
to deny the seller the benefit of the purchase consideration and to make it
available to the State for the satisfaction of the tax liability.
4.9.8. The liability of a
successor extends to taxes incurred in the course of operation of the business
by the former owner and any successor liability of the former owner. The
liability may include any liability of the former owner for tax, interest,
additions to tax, and penalties that is due and payable, and any such liability
that is not due and payable because the former owner has not filed tax returns
at the time required by law. The liability includes all taxes, penalties,
interest, and additions to tax, whether assessed or unassessed against the
former owner, without regard to whether a tax lien has been issued or perfected
against the former owner. If any former owner is given a certificate from the
Tax Department stating that no taxes are due from his former owner, then the
successor shall only be liable for the tax liability of the successors' former
owner not covered by the said certificate.
4.9.8.1. The liability of a successor
includes taxes that are required by law to be paid prior to the sale or
transfer of the business or stock of goods, even if the liability of the former
owner is not determined at the time of the sale or transfer. If an audit
conducted after the sale or transfer shows a deficiency for periods prior to
the sale or transfer, the deficiency is a liability of the former owner and a
liability of the successor.
4.9.9. The liability of a successor in
business is not limited to the amount of purchase money, or consideration
received by the former owner, unless the successor avoids liability or limits
liability by one or more of the following methods. If the purchase of a
business or stock of goods is an arms-length transaction, the purchaser may
avoid any successor liability by requiring the seller to produce a receipt from
the Tax Commissioner showing all taxes of the seller have been paid. If the
purchase of a business is an arms-length transaction, the purchaser may limit
successor liability by withholding enough of the purchase money to satisfy the
tax liability of the seller. If the purchase or transfer of a business or stock
of goods is not an arms-length transaction, the purchaser or transferee may
avoid any successor liability by requiring the seller or transferor to produce
a receipt from the Tax Commissioner showing all taxes of the seller or
transferor have been paid.
4.9.10.
The liability of a successor is determined by law and cannot be avoided or
altered by contracts or agreements between the former owner and successor.
Thus, a contract or other agreement, providing that the purchaser, transferee,
seller, or transferor is or is not responsible for the tax liability of the
former owner, or that the former owner has no tax liability, does not alter the
liability of the successor.
4.9.11.
The liability of a successor may be determined or estimated and an assessment
made against such successor. An assessment against a successor is considered to
be a proceeding for the collection of the tax liability of the former owner. If
the liability of the former owner is determined to be due by an assessment
which has become final, an assessment against a successor must be made within
five years after the date on which the former owner filed its annual return, or
if no annual return is required, five years after the latest periodical return
required to be filed in any year is filed.
