A taxpayer’s request for reconsideration of a Virginia sales and use tax determination was denied since the taxpayer failed to prove that the Virginia Department of Taxation (DOT) erroneously assessed tax on equipment purchased under a lease/purchase agreement. The DOT’s audit had developed an audit sample factor and extrapolated the factor over the entire audit period since the taxpayer had not filed returns or remitted sales tax or use tax. One transaction included in the sample was the exercise of an end of lease option and the purchase of the leased equipment. The DOT auditor determined that the taxpayer was liable for tax on the end of the lease purchase option because it could not identify the equipment purchase as an asset. The taxpayer appealed the determination, contending that the lease was exercised for a one-time purchase of computer equipment, which was not representative of normal business purchases and should be removed from the audit sample. The Tax Commissioner’s determination upheld the assessment. The taxpayer sought reconsideration, arguing that identifying the equipment purchased is not relevant because the DOT acknowledged that such a purchase was not a representative transaction. Additionally, the taxpayer provided an invoice that it asserts proves the equipment at issue was computers. The taxpayer also argued that the parties’ business needs and relationship did not require specific language in the lease/purchase agreement. The DOT agreed that the purchase of equipment at the end of a lease would constitute an isolated transaction that should be removed from the sample, provided that the taxpayer produce clear evidence that the equipment purchased at the end of the lease was the same equipment that was assessed in the audit. When a dealer fails to maintain adequate records, the DOT is authorized to use the best information available to reconstruct a dealer’s sales or purchases to determine whether a tax liability exists. The taxpayer did not furnish any evidence that the computers listed on the invoice it provided are the same equipment that is the subject of the lease agreement. The taxpayer failed to meet its burden of proof. As such, the taxpayer’s request was denied. (Ruling of Commissioner, P.D. 20-89, Virginia Department of Taxation, May 27, 2020, released July 2020)