W. Va. Code R. § 110-15-4

Current through Register Vol. XLI, No. 24, June 14, 2024

Section 110-15-4 - Collection of Tax; Accrual; Liabilities

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.

W. Va. Code R. § 110-15-4