How to stop collecting sales tax in Virginia
by November 1, 2020
Great news out of Virginia! The Virginia Tax Commissioner recently announced that storing inventory in a fulfillment center does not create sales tax nexus.
Your sales tax burden as an Amazon seller is about to get one state easier!
For Amazon FBA sellers and other merchants who may have used a fulfillment service in Virginia, this means that you may be able to stop collecting sales tax in Virginia.
Go about this cautiously. This letter ruling is an interpretation of Virginia code. As we said in our previous post about this news, states have generally trended toward being more aggressive about sales tax rather than less. Another governing body in Virginia may come back and re-interpret it. So if you have a Virginia sales tax license you might want to consult with your accountant first before making this business decision.
Also, you may have other nexus causing activities in Virginia. Be sure you don’t have sales tax nexus in Virginia before canceling you sales tax account.
If you’ve decided you do not have to collect sales tax in Virginia, you should make sure you do several things:
1.) Cancel your Virginia sales and use tax registration and file any final sales tax returns due
2.) Stop collecting sales tax through Amazon (and any other channels on which you collect)
3.) Remove Virginia from your TaxJar dashboard
Let’s get started.
How to Cancel your Virginia Sales Tax Registration
Since first writing this post, we’ve discovered two ways to cancel your Virginia sales tax registration – by letter and online.
Letter Method
When this news first broke, we spoke with a representative from Virginia taxation. Her advice was to send in a letter stating that you do not have sales tax nexus in the state (you can reference the letter ruling) and specifically state that you wish to “cancel your use tax account without liability.” She stressed that sellers should include this wording in order to indicate that you do not have liability for sales tax in the state.
Here is a sample letter you can use after you’ve filed your final Virginia sales tax return:
[Date]
Virginia Department of Taxation
PO Box 1115
Richmond, VA 23218To Whom it May Concern,
I am writing in reference to Virginia State Tax Commissioner’s Ruling 15-194. This ruling clarifies that my
business does not have sales and use tax nexus in Virginia, and I would like to cancel my Virginia sales and
use tax registration without liability. I have stopped collecting any sales and use tax as of the date of this letter
and my final return has been filed and paid in full.
Please advise me when my account is closed.
Sincerely,
[Your Name]
You can either mail or fax this letter:
Virginia Department of Taxation
PO Box 1115
Richmond, VA 23218
Fax: (804) 254-6111
Online Method
TaxJar user Susie D. recently wrote in with an easier method of canceling your Virginia sales tax registration.
- Login to your Virginia DOR account at VATAX Online Services for Businesses
- Click “Update your Business Profile” in the main menu
- Click the “End Liability of a Tax Account” link
- Reference the letter ruling in the box for comments and also mention that you wish to “cancel your use tax account without liability” (the same thing you would say if you write a letter).
Keep in mind that if you have sales tax nexus in Virginia due to other factors aside from storing products in fulfillment centers there, then you should not cancel your Virginia sales and/or use tax account. You will likely also need to file a final Virginia sales and use tax return.
How to Stop Collecting Virginia Sales Tax in Amazon Seller Central
Once your sales tax permit has been canceled, you should stop collecting sales tax from your Virginia buyers. Here’s how to do that:
1.) Go to Seller Central and login to your account
2.) Click on “Settings” and then click “Tax Settings” from the dropdown menu.
3.) Click “View/Edit your Tax Collection and Shipping & Handling and Gift Wrap Tax Obligations Settings”
4.) From here, uncheck the boxes next to Virginia to discontinue collecting sales tax in the state.
Note: You may also be collecting sales tax in Virginia on other channels, such as eBay, Shopify, etc. You can double check on which channels you collect from Virginia buyers here. If you no longer have nexus in Virginia you should also stop collecting sales tax from Virginia buyers on those platforms.
How to Remove Virginia from Your TaxJar Account
Once your Virginia sales tax permit has been canceled and you have filed your last Virginia sales tax return, you will most likely wish to remove Virginia from your TaxJar dashboard. You can follow these steps to remove a state from your TaxJar dashboard.
