                                 CODE OF VIRGINIA

MISUSE OF EXEMPTION CERTIFICATES; SUSPENSION OF EXEMPTIONS; PENALTIES (§
58.1-623.1)

A. Whenever the Tax Commissioner determines that any person has misused an
exemption certificate, the Tax Commissioner, after giving such person
10-days&#8217; notice in writing specifying the time and place of hearing and
requiring him to show cause why the exemption should not be suspended, may
suspend the exemption held by such person. The notice may be personally served
or served by registered mail directed to the last known address of such person.

B. Any person who knowingly uses or gives an exemption certificate during a
period of suspension of an exemption under this section shall be guilty of a
Class 1 misdemeanor.

C. It shall be the duty of any person whose exemption is suspended under the
provisions of this section to notify each dealer from whom purchases or leases
of tangible personal property are made, of the suspension of its exemption, and
of the invalidity of any exemption certificates filed with such dealers.

D. In lieu of the suspension of a person&#8217;s exemption under subsection A,
the Tax Commissioner may assess a penalty of up to $1,000 for the misuse of an
exemption certificate by that person or by any other person who, with the
consent or knowledge of the exemption holder, has misused the certificate. The
penalty shall be assessed and collected as a part of the tax, and the person so
assessed may appeal the penalty pursuant to the provisions of Article 2 (&#xA7;
58.1-1820 et seq.) of Chapter 18 of this title.

E. In any instance in which the Tax Commissioner determines that there has been
any misuse of an exemption certificate, the person holding the exemption shall
be liable for the full amount of tax, and any interest thereon, applicable to
any purchase improperly made with his exemption certificate.

F. The suspension of the exemption shall require that the person pay the full
amount of the tax at the time of purchase and apply for a refund of the tax so
paid. No interest shall be paid on any such refund. Upon application of the
person whose certificate has been suspended, the Tax Commissioner, for good
cause shown, may reinstate the person&#8217;s certificate; however, any such
suspension period shall run for at least one year.

G. Notwithstanding &#xA7; 58.1-3, the Tax Commissioner may report any gross
misuses of exemption certificates to the Secretary of Finance and the chairmen
of the money committees, for their confidential use, prior to the beginning of
the following session of the General Assembly.

HISTORY: 1989, c. 12; 1999, cc. 762, 776; 2002, c. 775; 2003, cc. 757, 758.