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Learn the fundamentals of sales tax
Do you need to collect sales tax in Virginia?
You’ll need to collect sales tax in Virginia if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Virginia?
Virginia considers a seller to have physical nexus if you have any of the following in the state:
- An office or place of business
- An employee or independent contractor present in the state
- Goods in a warehouse
- Ownership of real or personal property
- Leased Property
- More than 12 deliveries of merchandise in a year in Virginia not by common carrier
- Advertisements in newspapers, periodicals, on billboards or posters, or by any other means not delivered by the US Mail
You can click here to read exactly what the Virginia Department of Taxationhas to say about what constitutes sales tax nexus in Virginia.
Do you have economic nexus in Virginia?
Effective July 1, 2019, Virginia considers businesses who make sales of $100,000 or more in Virginia, or at least 200 individual sales transactions into the state if in the previous or current calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Virginia’s economic nexus guidance for businesses here.
Is what you’re selling even taxable?
Services in Virginia are generally not taxable. However – if the service you provide includes creating or manufacturing a product, you may have to deal with the sales and use tax on products.
Retail sales of tangible products are taxable in Virginia, with a few exceptions. These exceptions include certain protective clothing, data center equipment and software, some assistive medical devices, and textbooks sold by learning institutions.
Is SaaS taxable in Virginia?
SaaS is non-taxable in Virginia. (Source)
How to get a sales tax permit in Virginia
All businesses are required to register through the Virginia Department of Taxation. They’ve set up VATAX to help you register online.
Your other option is to download and print the form at home. Simply fill out Form R-1 and send it to:
Virginia Department of Taxation
PO Box 1114
Richmond, VA 23218-1114
You need this information to register for a sales tax permit in Virginia:
- Business location
- Mailing address
- Contact info
- Sales tax types your business will be responsible for
- Basic info
Virginia does not charge for a sales tax permit. Other business registration fees may apply. Contact each state’s individual department of revenue for more about registering your business.
Collecting Sales Tax
The sales tax rate you collect in Virginia depends on whether you are based in Virginia or out-of-state.
How to Collect Sales Tax in Virginia if You are Based in Virginia
For in-state sellers, Virginia is an origin-based sales tax state. So if you live in Virginia, collecting sales tax on your retail sales is fairly easy. Collect sales tax at the tax rate where your business is located.
You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator. Local tax rates broken down by county are also available on the Virginia Tax site. The state sales and use tax rate in Virginia is 4.3%.
How to Collect Sales Tax in Virginia if you are Not Based in Virginia
This is where things get trickier for online sellers. Virginia wants sellers who made a sale into Virginia from outside the state to charge sales tax based on the destination of the buyer.
Should you collect sales tax on shipping charges in Virginia?
As long as you separately state the shipping charges on your bill to your customer, you do not have to charge sales tax on shipping.
If you combine shipping and handling charges together, then that amount is taxable. Handling charges must be separately stated from shipping charges.
If you include shipping in the price of the product you sell the customer, then shipping is considered part of the taxable transaction and Virginia declares that you must collect sales tax on shipping.
Read a full explanation of sales tax on shipping in Virginia here.
When are Returns Due?
When you file and pay Virginia sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Virginia?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Virginia, you will be required to file and remit sales tax either monthly or quarterly.
Virginia sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
Filing Sales Tax
When it comes time to file sales tax in Virginia you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in Virginia
Calculating how much sales tax you should remit to the state of Virginia is easy with TaxJar’s Virginia sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Virginia sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to File and Pay Sales Tax in Virginia
You have a few options for filing your Virginia sales tax return:
- File and pay through the Virginia Department of Taxation’s VATAX Online Service for Business. You can also remit your sales tax payment through their online system.
- File by mail – Fill out and mail form ST-8 (for out-of-state sellers) or ST-9 (for in-state sellers with one location)
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.