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The Ultimate Guide To Virginia Sales Tax

Welcome to our handy guide on Virginia sales tax. We'll walk you through everything you need to know, from the specific sales tax rates in different counties and cities across Virginia to answering some of the most common questions. Plus, we'll guide you on how to efficiently collect and file your sales tax in Virginia.

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What is Nexus?

You'll need to collect sales tax in Virginia if you have nexus there. There are two main 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.

Calculating Nexus in Virginia

Physical Nexus

Having a physical presence in Virginia can establish nexus. This might be a store, office, or warehouse, or even employees working in the state. Attending trade shows or business meetings in Virginia could also mean you have physical nexus.

Economic Nexus

Post-2018, economic nexus in Virginia is about your sales figures. If your business racks up over $100,000 in sales in Virginia or has more than 200 transactions in the state within a year, you’ve got economic nexus. This means collecting and remitting sales tax is on your to-do list.

Affiliate Nexus

If your business is connected to another business in Virginia, say through shared management, business name, or a distribution center, you might have affiliate nexus. This kind of connection can mean sales tax responsibilities.

Click-Through Nexus

Click-through nexus comes into play with affiliate marketing. If your business gets over $10,000 in sales through Virginia-based referrals in a year, you’re looking at click-through nexus and a need to handle sales tax.

Marketplace Nexus

Since July 1, 2019, big online platforms like Amazon or eBay are responsible for collecting and remitting sales tax for their sellers in Virginia. This applies if they hit the economic nexus thresholds in terms of revenue or transaction numbers.
Did you know logo

Virginia taxes non-prescription drugs and proprietary medicines, a bitter pill in terms of taxes.

Sales Tax Registration in Virginia

How to Get Your Virginia Sales Tax Permit

To get your sales tax registration in Virginia, you can easily do it online. Here's how:

Get Your Info Ready

Before you start, gather all the key details about your business. This includes your business name, address, contact info, type of entity, your Employer Identification Number (EIN) or Social Security number, and a brief on what you sell or the services you offer.

Create an Online Account

Head over to the Virginia Department of Taxation's website. Under the Business Taxes section, click on 'Register a New Business' and set up your account. This account is where you'll handle your future tax filings and payments.

Complete the Registration Form

Once your account is ready, fill in the online registration form with all the required details about your business and what you sell.

Submit and Wait

After filling out the form, submit it online and keep the confirmation number you receive. The Virginia Department of Taxation will then review your application. Once approved, they'll send you a Sales Tax Certificate by mail, which you should display at your business location.

Cost of Registering for a Virginia Sales Tax License

Great news - registering for a sales tax license in Virginia is free. No fees involved!

Federal Tax ID for Virginia Sales Tax License

Yes, for most business types, you'll need an EIN to register. If you're a sole proprietor, you might be able to use your Social Security number instead.

Other Virginia Registrations to Consider

Your business might need to register with other state agencies, depending on what you do. For instance, if you have employees in Virginia, you'll need to register with the Virginia Employment Commission. If you're selling alcohol, you'll have to register with the Virginia Department of Alcoholic Beverage Control. Make sure to research all registration requirements that apply to your business and industry.

Guide to collecting sales tax in Virginia

Is Virginia an Origin or Destination Sales Tax State?

Virginia operates on a destination-based sales tax system. This means you'll charge sales tax based on your customer's location in Virginia, not where your business is. So, remember to include both the state and any local sales taxes.

What Sales are Subject to Sales Tax in Virginia?

In Virginia, you're generally going to be collecting sales tax on physical items like furniture, appliances, and electronics. Some services that involve making things are also taxed.

Is Software as a Service (SaaS) Taxed in Virginia?

Right now, Software as a Service (SaaS) isn't typically taxed in Virginia. But tax laws can change, so it's smart to stay updated or chat with a tax pro if you're unsure.

What is Exempt from Virginiane Sales Tax?

There are a few things that don't need sales tax added in Virginia. Most food for home cooking, prescription medications, and certain medical supplies are tax-free. Some services, especially professional ones, usually aren't taxed either.

Who is Eligible for Virginia Sales Tax Exemptions?

In Virginia, certain groups don't have to pay sales tax. This includes government bodies, nonprofits, and some manufacturers. Resellers buying products to sell again can usually buy these items without paying sales tax upfront.

What To Do If Your Customer is Exempt from Sales Tax in Virginia?

Got a customer who's exempt from sales tax? Make sure to collect a Virginia Sales Tax Exemption Certificate from them. Keep this form safe—it's your proof for the tax-free sale if there's ever an audit.

What if You Lose a Virginia Sales Tax Exemption Certificate?

If a sales tax exemption certificate goes missing, reach out to your customer for a new one ASAP. It's crucial to have these for your records, as you might be on the hook for the sales tax if they're not available during an audit. Keep your records tidy and always have backups of these important documents.
Did you know logo

Virginia exempts sales tax on burial vaults, because death and taxes don't always go together. Tough luck in Virginia, Avenue Q.

Steps for Filing a Virginia Sales Tax Return

Your filing schedule in Virginia is based on how much sales tax you collect:

Monthly Filing:

If you collect more than $100 in sales tax each month, you're on a monthly filing schedule. Your sales tax is due by the 20th of the month following the reporting period.

Quarterly Filing:

If your monthly sales tax collection is less than $100, you file quarterly. The due dates are April 20, July 20, October 20, and January 20, following each quarter's end.

What If a Filing Date Falls on a Weekend or Holiday?

If your Virginia sales tax filing date lands on a weekend or holiday, the deadline extends to the next business day.

How to File a Virginia Sales Tax Return

Filing your Virginia sales tax is straightforward:
  1. Gather Sales Data: Compile all your sales info, including gross sales, taxable sales, exempt sales, and the tax you've collected.
  2. Log Into Your Online Account: Head to the Virginia Tax Online Services for Businesses and log in. If you don't have an account, you'll need to set one up.
  3. Access and Complete Your Return: Find the "File Return/Payment" section and fill in your sales tax return with the prepared data.
  4. Review and Submit: Double-check your return for accuracy, then submit it.
  5. Make Your Payment: You can pay your due sales tax via electronic check or card.
  6. Keep a Record of Your Confirmation Number: After submitting, you'll get a confirmation number. Keep this for your records.
Even if you didn't have any sales in a period, you still need to file a "zero return."

Penalties for Late Filing in Virginia

Missed deadlines can lead to penalties. A late filing or payment can attract a penalty of 6% per month of the due tax (up to 30%). If you fail to file, there's a minimum penalty of $10 or 10% of the tax due.

Sales Tax Incentives in Virginia

Virginia offers various sales tax incentives to boost business growth, especially in sectors like manufacturing and green energy. These can range from exemptions to credits. It's wise to talk to a tax expert or check with the Virginia Department of Taxation to see if you're eligible for any incentives.

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Top 5 Tips for Filing Sales Tax in Virginia

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