Accelerated Sales and Use Tax
Legislation passed by the Virginia General Assembly requires dealers, whose taxable sales totaled $2.5 million or more for the 12-month period ending June 30, 2015, to make an accelerated retail sales and use tax payment in June 2016.
This requirement is based on aggregate sales and purchases for all business locations, regardless of whether the dealer files separate, combined or consolidated returns.
Affected dealers are required to pay 90% of the sales tax they owed for the month of June 2015, minus the applicable dealer’s discount and prepaid wireless fee for that month.
After making the accelerated payment, dealers should file their June 2016 returns and pay any difference between the actual tax liability for the month and the accelerated sales tax payment by July 20, 2016. If there is any remaining overpayment after the July payment, the amount will be refunded.
Detailed information is provided in our Guidelines for the Accelerated Sales Tax Payment.
In early May, the Department of Taxation will mail letters to all business locations of dealers that meet the $2.5 million threshold. In late May, the Department will mail notifications to dealers with the specific amount of the tax owed and instructions for making the payment.
Note: If a business location has a tax liability of $25 or less, that location will not receive a notification.
Call our Customer Contact Center at (804) 367-8037 if your business meets the accelerated sales tax payment criteria and did not receive a letter or if you received a duplicate voucher by mistake.
All dealers are required to file and pay electronically unless they have already been granted an electronic filing waiver.
Dealers have two electronic payment options:
- Use VATAX Online Services for Businesses – a free, secure online filing and payment service provided by the Department. If you are a new user, you will first need to enroll using your 15-digit tax account number, zip code of your business mailing address, and the total amount due on the most recently filed return. When you log in, you will be provided with instructions about making the accelerated sales tax payment. You can also schedule the payment in advance for June 30, 2016.
- Use ACH Credit. Contact your financial institution to make arrangements to credit the state’s bank account with funds from your bank account. Ask your financial institution about its ACH origination services and any costs. Check your bank’s schedule for payment processing to be sure your payment is received by June 30, 2016, and tell your bank to identify the payment for the period ending June 30, 2016. For more information about using ACH Credit, see our Electronic Payment Guide.
Dealers that have been granted an electronic filing waiver should mail their check and payment voucher(s) to:
Virginia Department of Taxation
P.O. Box 26627
Richmond, VA 23260-6627
- Electronic payments: June 30, 2016
- Check payments: Postmarked on or before June 27, 2016
Dealers that do not make accelerated sales tax payments on time will be subject to paying a 6% penalty based on any late or unpaid accelerated sales tax payment. Interest will also accrue on late payments. For example, if a dealer is required to make an accelerated payment of $10,000 in June 2016 but does not make the payment until July 10, 2016, the dealer will receive a one-time penalty assessment for $600 ($10,000 x 6%), plus applicable interest.
If less than the amount due is paid, the 6% penalty will apply only to the underpayment. For example, if the required accelerated payment amount is $10,000 and the dealer pays only $8,000 by the due date, the penalty will apply to the underpayment of $2,000. The dealer will be assessed $1,200 ($2,000 x 6%), plus applicable interest.
Dealer who are unable to make the required accelerated sales tax payment may request an undue hardship waiver. Dealers must provide written documentation and financial records that clearly demonstrate how making the payment would cause undue hardship.
Examples of undue hardship include:
- Dealer has had a substantial decline in sales since the previous June
- Dealer is selling or closing a significant part of the business
- Out-of-state dealer no longer makes sales in Virginia
Generally, a dealer that can show an undue hardship will be allowed to make an accelerated sales tax payment equal to 90% of the average monthly retail sales and use tax liability for the first quarter of calendar year 2016. A full waiver of the required payment is only granted in extraordinary circumstances.
Applications for hardship waivers should be submitted no later than June 9, 2016 to:
Virginia Department of Taxation
P.O. Box 5771
Richmond, VA 23220-0771
FAX: (804) 786-2087
Contact our Customer Contact Center at (804) 367-8037 if you need assistance.