Virginia Sales Tax Guide for Businesses
- Sales Tax Rate
- Local Taxes
- Department of Taxation
- Tax Line
We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Virginia, and if so, how best to tackle the sales tax situation in the Old Dominion.
After reading this, you’ll know:
- Do you or don’t you need to collect Virginia sales tax?
- Which customers do you collect from?
- How much do you collect?
- What do you do with all the sales tax you’ve collected?
- Way more than you probably ever wanted to know about Virginia sales tax
Do you Have Sales Tax Nexus in Virginia?
Good news! You only have to begin thinking about Virginia sales tax if you have sales tax nexus in Virginia.
“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.
Virginia considers a seller to have sales tax nexus in the state 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 Revenue (Virginia’s taxing authority) has to say about what constitutes sales tax nexus in Virginia.
Do you Have Sales Tax Nexus in Virginia if you Sell on FBA?
While Virginia is home to two Amazon Fulfillment Centers, the state’s Tax Commissioner issued a letter ruling in October 2015 stating that solely using a fulfillment center in Virginia does not create sales tax nexus. You can read more about this ruling here.
So, as of October 2015, using a fulfillment center in Virginia does not create sales tax nexus. If you’d still like to determine whether or not you have items stored in an FBA warehouse in Virginia, you can do one of two things:
- Login to Amazon Seller Central and pull your inventory report
- Sign up for a 30-day free trial of TaxJar and find out from where your Amazon inventory ships with our Amazon badge feature
You may find that your inventory is stored in one or both of Virginia’s Amazon fulfillment centers in this list:
|Warehouse Code||Address||County||Tax Rate|
|RIC1||5000 Commerce Way, Petersburg, VA 23803||Dinwiddie||5.3%|
|RIC2||1901 Meadowville Technology Parkway Chester, VA 23836||Chesterfield||5.3%|
Is What You’re Selling Even Taxable?
You’ve probably read this far because you realized you have sales tax nexus in Virginia. Your next step is to determine if what you’re selling is even taxable.
Services in Virginia are generally not taxable. So if you’re a freelance writer or a plumber, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products.
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.
So if you sell toys, then charge sales tax to your Virginia customers.
But if you’re a service provider, don’t charge sales tax to your Virginia customers.
If you have sales tax nexus in Virginia and your products are taxable, your next step is to register for a sales tax permit.
How to Register for a Sales Tax Permit in Virginia
Sellers with sales tax nexus in Virginia must apply for a Virginia sales tax permit.
Don’t skip this step! Virginia considers it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Virginia.
How to Collect Sales Tax in Virginia
So you’ve determined that you have sales tax nexus in Virginia and what you’re selling is taxable. And you’re all set and registered for your Virginia sales tax permit(s).
The next step is to determine how much sales tax to collect.
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 is fairly easy. Collect sales tax at the tax rate where your business is located.
Example: You’re an online seller operating out of your house in Roanoke, VA. Since Roanoke is not located in either Northern Virginia or Hampton Roads the sales tax rate is 5.3 percent (4.3 percent for the state + 1 percent local). In this case you would charge 5.3 percent on all taxable transactions shipped to customers in Virginia – regardless of where the customer is located.
If you have more than one location in Virginia, then you would base the sales tax rate you charge on the point of origin of your sale.
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.
Example 1: You live in and run your business in Cincinnati, Ohio but have sales tax nexus in Virginia because one of your employees lives there. You sell a taxable item to a customer who wants it shipped to their home in Danville, VA. Since Danville is not in Northern Virginia or Hampton Roads then the state says to collect sales tax at a rate of 5.3 percent (based on the destination of the item).
Example 2: You’re the same business owner in Cincinnati, Ohio with sales tax nexus in Virginia due to having an employee there. You sell a taxable item to a customer who wants it shipped to their home in Norfolk, VA. Since Norfolk is in the Hampton Roads region, then the state says to collect sales tax at a rate of 6.0 percent (again, based on the destination of the item).
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 handlings 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.
|1||Virginia Beach||447,021||Virginia Beach City||6.00%|
|5||Newport News||180,726||Newport News City||6.00%|
|15||Manassas||40,605||Manassas Park City||6.00%|
Caption: Top 20 Virginia cities by population and their sales tax rates
When are Virginia Sales Tax Returns Due?
Virginia sales tax returns are always due the 20th of the month following the reporting period. You’ll be assigned a sales tax filing frequency when you apply for your Virginia sales tax permit.
2016 Virginia Monthly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|January||February 22, 2016*|
|February||March 21, 2016*|
|March||April 20, 2016|
|April||May 20, 2016|
|May||June 20, 2016|
|June||July 20, 2016|
|July||August 22, 2016*|
|August||September 20, 2016|
|September||October 20, 2016|
|October||November 21, 2016*|
|November||December 20, 2016|
|December||January 20, 2017|
2016 Virginia Quarterly Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Q1 (Jan - Mar)||April 20, 2016|
|Q2 (Apr - Jun)||July 20, 2016|
|Q3 (Jul - Sep)||October 20, 2016|
|Q4 (Oct - Dec)||January 20, 2017|
2016 Virginia Annual Sales Tax Filing Due Dates
|Taxable Period||Due Date|
|Year 2016||January 20, 2017|
*indicates a due date pushed back due to a weekend or holiday
How to File Sales Tax in Virginia
When it comes time to file sales tax in Virginia you must do two things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
We’ll walk you through these steps.
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
Virginia requires taxpayers to file and pay sales tax online. You can do this one of two ways:
- 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. Check here for our step-by-step guide to filing a Virginia sales tax return.
- File by mail - Fill out and mail form ST-9
- AutoFile with TaxJar - 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.
Other Facts You Should Know about Virginia Sales Tax Filing
There are a few more things you should know about sales tax in Virginia:
Late Filing Penalty - 6% per month of the tax imposed up to 30%. The late penalty isn’t charged until after 6 months have passed so if the business hasn’t filed by then, they will owe the full 30% of the penalty.
Late Payment Penalty - 6% per month of the tax imposed up to 30%. The late penalty isn’t charged until after 6 months have passed so if the business hasn’t paid by then, they will owe the full 30% of the penalty. The late filing penalty and the late payment penalty are not assessed together. So if a business has already received a late filing penalty, they won’t be charged a late payment penalty too.
Interest - Interest is also added to a late payment and accrues at a rate of 2% per month.
Other penalties for fraud or serial offenses include higher penalties and even criminal charges.
Virginia requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay.
Virginia says that if your business doesn’t owe more than $20,000 in sales tax on average, they will offer a discount when eligible businesses file and pay the tax in a timely manner. This means that businesses can keep a portion of the tax they have collected. The discount is not allowed on the local portion of the tax.
The state encourages you to refer to the corresponding instructions for additional information on computing the discount, as discount factors vary by tax type.
Virginia Sales Tax Holidays
Virginia has a sales tax holiday in 2016:
August 5-7, 2016: Back to School Sales Tax Holiday & Energy Efficiency Sales Tax Holiday
Check here for more information about Virginia’s sales tax holidays including how to handle sales tax holidays as an online seller.
And that’s it. You’ve mastered Virginia sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.
Virginia Sales Tax Resources
For more about Virginia sales tax, check out the Virginia section of the TaxJar blog.