W. Va. Code R. § 110-15-6

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

Section 110-15-6 - Taking Exemption Certificate, Material Purchase Certificate Number or Direct Pay Permit Number

6.1. Vendor Must Show Sale or Service Exempt; Presumption. - In the case of sales subject to Section 8a or 9.3.4.4 of these regulations or Section 9.3 of these regulations, the burden of proving that a sale or service was exempt from the tax shall be upon the vendor, unless he in good faith takes from the purchaser his direct pay permit number, a properly completed material purchase certificate number or a properly completed exemption certificate signed by and bearing the address of the purchaser and setting forth the reason for the exemption: Provided, That effective July 1, 1990, a contractor or subcontractor may only claim the exemption authorized by Section 9.3.4.4 of these regulations by issuing his material purchase certificate number to his vendor. In order to assure maintenance of appropriate records, the vendor should take during his taxable year one completed exemption certificate from each of his purchasers who are authorized to issue an exemption certificate for exempt purchases. However, for purposes of the contracting exemption provided under Section 9.3.4.4.a of these regulations, the vendor should take one completed material purchase certificate number for each exempt contracting project or direct pay permit number. The completed exemption certificate, material purchase certificate number or direct pay permit number may be used for the exempt purchases by the respective purchaser. Except as otherwise provided in this Section or Section 9.3.4.4 of these regulations, the direct pay permit, or the material purchase certificate issued by the Tax Commissioner for the specific contracting activity, may be used for exempt purchases of tangible personal property to be incorporated in the exempt contracting activity. If a contractor decides to use a material purchase certificate when claiming an exemption, he must obtain the application from the entity which awarded the contract. As of October 1, 1990, the contracting exemption provided in Section 9.3.4.4.a was generally repealed and use of the material purchase certificates became very limited. The material purchase certificate may only be used in the manner specified in Section 9.3.4.4.a and Section 109 of these regulations. See Section 109 of these regulations for additional information on the taxation of materials for use in governmental contracts. To prevent evasion of the consumers sales and service tax, it shall be presumed that all sales and services are subject to tax until the contrary is clearly established.

6.1.1. Liability of Purchaser for Failure to Pay the Sales or Use Tax or Provide Appropriate Indicia of Tax Exemption. - Except for sales exempt per se under Section 9.2 of these regulations, if any purchaser unlawfully refuses to pay to the vendor the consumers sales and service tax or, where appropriate, the use tax, or in the case of a sale subject to Section 9.3 of these regulations a purchaser unlawfully refuses to sign and present to the vendor a proper exemption certificate or a lawful material purchase certificate number indicating that the sale is not subject to either the consumers sales and service tax or the use tax, or presents to the vendor a false exemption certificate or a false, cancelled, expired or otherwise ineffective or unlawful material purchase certificate number, or, after presenting an exemption certificate or material purchase certificate number, uses the property or services purchased in such manner that would cause the sale to be subject to the sales or use tax, or presents a direct pay permit number which is false, cancelled, expired or otherwise ineffective or unlawful or uses such direct pay permit in a manner not authorized by the Tax Commissioner, such purchaser shall be personally liable for the amount of tax applicable to the transaction or transactions.

6.1.1.1. In such case, the Tax Commissioner has authority to make an assessment against such purchaser, based upon any information within his possession or that may come into this possession. The assessment and notice thereof shall be made and given in accordance with W. Va. Code '11-10-1 et seq.

6.1.1.2. Sections 6.1.1 and 6.1.1.1 of these regulations shall not be construed as relieving the vendor from liability for the tax; Provided, That the vendor shall be relieved from liability for the purchaser's refusal to pay the tax or provide appropriate indicia of tax exemption if the vendor notifies the Tax Commissioner in writing of such refusal; and the vendor shall be relieved from liability for the purchaser's presentation of false, expired, cancelled, or otherwise ineffective or unlawful indicia of tax exemption unless the vendor has accepted such indicia in bad faith, or accepted such indicia in complicity with the purchaser or others for the purpose of allowing the purchaser, the vendor or others to unlawfully evade the payment of tax or has otherwise conspired or contrived to cause or assist in unlawful tax evasion. The information provided to the Tax Commissioner must include the name and, if known, address of the purchaser, the date of the purchase and the description of the item or service purchased, the purchase price thereof, and the amount of tax not collected.

6.1.2. Because of the nature of the transactions, purchasers of tangible personal property or taxable services which are specified in Section 9.2 of these regulations are exempt per se and are not required to complete an exemption certificate in order to qualify for the exemption. However, an exemption certificate, material purchase certificate where appropriate, or a direct pay permit number is required for an exemption claimed under Section 9.3 of these regulations.

6.2. Retailer Must Show Sale or Service Exempt; Presumption. - The burden of proving that a sale otherwise subject to the use tax was not taxable shall be upon the seller, unless he, in good faith and under the authority provided in W. Va. Code '11-15A-3c, takes from the purchaser his direct pay permit number, a properly completed material purchase certificate or a properly completed exemption certificate signed by and bearing the address of the purchaser setting forth the reason for exemption of the sale from imposition of the tax. The exemption certificate shall be substantially in the form prescribed by the Tax Commissioner. Such retailer may take from the purchaser the purchaser's direct pay permit number or material purchase certificate number, noting same on the invoice, sales slip or other record of the sale. To prevent evasion, it shall be presumed that all proceeds are subject to the tax until the contrary is clearly established.

6.3. Acceptance of Exemption Certificate or Material Purchase Certificate. - The acceptance of a properly executed exemption certificate or material purchase certificate relieves the vendor and the retailer from the burden of proof only if accepted in good faith so long as the transaction is one for which an exemption certificate or material purchase certificate may be issued. Any person who gives an exemption certificate or material purchase certificate to a vendor or retailer and knows, at the time of purchase, that the article will be used in a manner other than expressed in the exemption certificate, shall be subject to criminal sanctions as provided in W. Va. Code '11-9-1 et seq.

6.3.1. A vendor who makes sales to a non-resident purchaser may, under certain circumstances, accept the exemption certificate utilized in the state in which the non-resident is located. Even though an out-of-state exemption certificate is used, the transaction must be one which is exempt in this State. In order for such an exemption certificate to be acceptable, it must provide the same information as that required on the exemption certificate or, where appropriate, the material purchase certificate used in this State: name and address of the purchaser, basis for the claim of exemptions; and the signature of the person authorized to sign such an exemption certificate or use the material purchase certificate for the purchaser.

6.4. Retention of Exemption Certificate and Material Purchase Certificate. - In order that the Tax Department may verify a vendor's or a retailer's taxable and nontaxable sales upon audit, it is necessary that such persons retain executed exemption certificates, material purchase certificates and other appropriate books and records for at least three (3) years or so long as the taxable period remains open for assessment or refund whichever is greater. An exemption certificate or material purchase certificate, to be valid, must be given by the vendee and accepted by the vendor at the time of the sale and not thereafter. If a vendor lists nontaxable sales or services for which he has no exemption certificates or material purchase certificate, the Tax Department will presume such sales were taxable and make an assessment of tax against the vendor. Of course, the preceding sentence is not applicable to sales of articles and types of services enumerated in Section 9.2 of this regulation. A sample exemption certificate will be furnished by the Tax Department to any vendor, retailer or organization upon request, in order that the certificate may be reproduced for the convenience of its customers.

W. Va. Code R. § 110-15-6