Classic Cobwebs

15-5

On September 22, 2014, the Department issued the Taxpayer two assessments for gross receipts tax, penalty, and interest for the tax years ending December 31, 2010, and 2011.  The Taxpayer filed a protest to the assessments.  The Taxpayer is in the business of selling antiques in antique malls.  The Taxpayer rents space in an antique mall on a monthly basis.  The items are priced by the Taxpayer, and then sales are handled by the mall staff, who collect the money, but then pass it all on to the Taxpayer.  The mall is only compensated in the form of the Taxpayer’s monthly rent.  The Taxpayer understood that the mall owners paid gross receipts tax on the sale of their items, but the Taxpayer and mall owner did not have a provision in their contract addressing gross receipts tax.  The Taxpayer was sent a notice of limited scope audit and asked the mall owner for assistance in resolving the audit.  The mall owner told the Taxpayer she would take care of it.  The mall owner, who was in delinquent status with the Department, submitted a TS-22 Agreement to Collect and Pay Over Taxes to the Department.  The TS-22 agreement was denied by the Department.  The mall owner submitted the form a second time, and again the Department did not approve the agreement.  The Taxpayer was engaged in business during the period in question, and did not have the necessary agreement or Nontaxable Transaction Certificate in place regarding their gross receipts tax situation. The Taxpayer’s protest was denied.