Sales and Use Tax
Several important changes to Virginia's Retail Sales and Use Tax go into effect July 1, 2013. Find out more.
- Accelerated Sales and Use Tax
- Online Filing Options
- Retail Sales and Use Tax
- FIPS Code Lookup
- Consumer Use Tax for Businesses
- Vending Machine Sales Tax
- Motor Vehicle Fuels Sales Tax
- Prepaid Wireless E-911 Fee
- Tire Recycling Fee
- Digital Media Fee
- Public Facilities
- Motor Vehicle Rental Tax
- Sales Tax Holidays
- Approved Voucher Vendors These links provide a list of software vendors approved for filing vouchers with the Department of Taxation.
- General Provisions
- Retail Sales Tax
- Use Tax
- Registering for Retail Sales and Use Tax
- Filing Procedure
- Penalty and Interest
- Direct Pay Permits
- Common Exemptions and Exceptions to the Retail Sales and Use Tax:
The Virginia Retail Sales and Use Act establishes a tax on the sale, lease or rental of tangible personal property or the use or consumption of tangible personal property in Virginia, as well as taxable services in Virginia.
A seller is subject to the sales tax imposed on gross receipts from retail sales. "Retail sales" means sales made for any purpose other than for resale. The tax may also apply to the furnishing of transient accommodations and the lease or rental of personal property. Code of Virginia § 58.1-603.
The seller is responsible for collecting the tax from the customer on each taxable sale. The tax must be separately stated and added to the sales price or charge. The general sales tax rate for Virginia is 5 percent (4 percent state tax and 1 percent local tax). In Bulletin 5-78, sales of eligible food items are subject to a reduced sales tax rate of 2.5 percent ( 1.5 percent state tax and 1 percent local tax).
In-state dealers – Generally, in-state dealers (individuals or businesses) are those making Virginia sales while having one or more physical locations in Virginia. Businesses subject to the Virginia Retail Sales Tax must submit a monthly return to the Department, Form ST-9, by the 20th of the month after the sales occurred. A return must be filed for each period, even if there are no sales to report. Based on your tax liability, the Department may change your filing frequency from monthly to quarterly. If your filing frequency is changed, you will be notified prior to the effective date.
Beginning with the July - September 2013 return, due October 21, 2013, quarterly filers must submit their returns and payments electronically. To meet this requirement, the returns must be filed using eForms, Business iFile or Web Upload. Monthly filers have been required to file and pay electronically since July 2012.
Out-of-State dealers – Some dealers make Virginia sales but are physically located outside of Virginia. “Out-of-state dealers” refers to individuals or businesses that, in most cases, are physically located outside of Virginia but make qualified sales, leases or rentals into Virginia. If an out-of-state dealer has sufficient nexus with Virginia, (meaning a significant connection or link to Virginia according to Virginia law,) the dealer must register with Virginia to collect Virginia Use Tax on their Virginia sales. For further information on nexus criteria, refer to Code of Virginia §58.1-612.
Out-of-state businesses that do not have sufficient nexus with Virginia may still choose to register with Virginia to collect the tax as a courtesy to their Virginia customers. Whether required to register or not, any out-of-state dealer registered to collect Virginia Use Tax must remit the collected tax to Virginia on a monthly basis, unless a different filing frequency has been established by the Department.
Businesses subject to the Virginia Use Tax must file Form ST-8, Out-of-State Dealers Use Tax return, by the 20th of the following month. A return must be filed for each period, even if there are no sales to report. Based on your tax liability, the Department may change your filing frequency from monthly to quarterly. If your filing frequency is changed, you will be notified prior to the effective date.
Businesses can register for Retail Sales and Use Taxes by completing the Form R-1 Business Registration Application, or by registering online. Once registration is complete, businesses receive Form ST-4, Certificate of Registration. The ST-4 must be prominently displayed at the registered location
Determining your filing option
When you register for Sales Tax you will be required to select the type of return you will submit.
Businesses with multiple locations can select how they will submit their returns from the following three options:
Separate – File a separate return for each business location. Businesses with only one location must use this option.
Combined – File one combined return for all business locations in the same locality. Any business with two or more locations in the same locality may elect to file a single combined return to report and remit Sales and Use Tax for all locations within that locality.
Consolidated – File one consolidated return for all business locations. Any business that has five or more business locations in two or more localities may elect to file a consolidate return. If you choose this option, you will file the ST-9CO Package, which contains the ST-9CO (Retail Sales and Use Tax Return for Consolidated Filers), as well as the ST-9B (Schedule of Local Taxes).
Seasonal Filers – Dealers whose businesses only operate during certain months of the year may request that their business registration be set up on a seasonal basis. When registering, the business must indicate which months it operates during the year. Seasonal businesses must still file monthly returns to report sales, but only for the months in which they operate.
- Non-Fixed Dealers – Businesses that do not have a permanent fixed business location are designated as “non-fixed.” Such businesses are not required to provide physical addresses for business locations, but are required to provide locality information for all of their sales. Examples of non-fixed dealers are vendors at craft shows, flea markets, gun shows, etc.
Beginning with the July - September 2013 return, (due October 21, 2013), quarterly filers of the ST-9 must submit their returns and payments electronically. Monthly filers have been required to file and pay electronically since July 2012.
To meet this electronic filing requirement, you must file your return using eForms, Business iFile or Web Upload. Learn more about these three options (link takes you to a short video).
Out-of-state sellers should submit their monthly sales tax report on Form ST-8, Virginia Out-Of-State Dealer’s Use Tax Return, by the 20th of the month after the sales occurred, whether or not the business has had taxable sales for the month. You will automatically be mailed forms preprinted with your account information unless you file electronically or use tax software to prepare your returns.
If you are unable to make the necessary changes to file and pay electronically you may request a temporary waiver. Submit your request in writing, providing your business name, Virginia tax account number, contact person, phone number, e-mail address (optional), mailing address, the reason for the request, and the date when you can file and pay your retail sales taxes electronically. Send your request to:Virginia Department of Taxation P.O. Box 27423 Richmond, Va. 23261 FAX: (804) 367-3015
A discount on the amount of sales tax due is allowed when eligible businesses file and pay the tax in a timely manner. Dealers can keep a portion of the tax they have collected; however, the discount is not allowed on the local portion of the tax. In addition to the Retail Sales and Use Tax, a dealer’s discount is available for the following taxes:
- Vending Machine Tax
- Digital Media Fee
- Tobacco Products Tax
- Motor Vehicle Fuel Sales Tax
Legislation enacted by the General Assembly suspended the dealer discount for dealers whose monthly tax liability exceeds $20,000 and reduced the dealer discount for all other dealers. Those dealers whose liability is less than $20,000 per month are allowed a discount based dealer's taxable sales.
Please refer to the corresponding instructions for additional information on computing the discount, as discount factors vary by tax type. For more information regarding the change in the dealer discount, please see Virginia Tax Bulletin 10-5.
If you fail to file or pay the full amount of sales tax due by the due date, a penalty of 6 percent per month is added to the tax owed. The maximum penalty is 30 percent; the minimum penalty is $10. The minimum penalty applies to late returns even if there is no tax owed.
Interest is added at the federal underpayment rate plus 2 percent and accrues on the tax until paid.
A Direct Payment Permit allows certain companies to purchase goods without paying the sales or use tax at the time of purchase. These companies agree to pay the tax due directly to the Department, and allocate the local tax so that no county or city will lose any revenue. Direct Payment Permits are typically issued to manufacturers, contractors or mine operators who store tangible personal property within the Commonwealth for use both in and outside of Virginia.
In general, all sales, leases and rentals of tangible personal property, as well as accommodations and certain taxable services, are subject to Virginia Sales and Use Tax, unless an exemption or exception is established.
There are specific instances where a tax exemption may apply without the need of an exemption certificate. The most common exemptions and exceptions to the Retail Sales and Use Tax are:
In many cases, in order to sell, lease or rent tangible personal property without charging Sales Tax, a seller must obtain a Certificate of Exemption from the buyer.
The sales-for-resale exemption prevents tax from being charged multiple times on the same item. The sales tax is intended to be applied to the final sale to the consumer at retail; therefore, this exemption prevents the tax being applied on goods as they are distributed before being sold at retail.
A dealer who makes a sale without charging applicable Sales Tax must retain a copy of the exemption certificate on file to substantiate the sale was indeed tax exempt under the law.
The use tax applies to the use, consumption or storage of tangible personal property in Virginia when the Virginia sales or use tax was not paid at the time of purchase. The use tax is computed on the cost price of the property, which is the total amount for which the property was purchased, including any services that are a part of the purchase, valued in money or otherwise, and includes any amount for which credit is given the purchaser or lessee by the seller.
Mail with Form ST-7 and Form ST-6B (PDF 132 Kb), if applicable, with your payment to the following address:Virginia Department of Taxation
P.O. Box 26627
Richmond, Virginia 23261-6627
This return is due by the 20th day of the following month after the close of the reporting period. Returns are not required to be filed for periods in which no use tax is due.
If you have questions concerning this tax or how to file the returns, please call (804) 367-8037.
General Liability: A tax is imposed on dealers who place vending machines for the sale of tangible personal property. The tax is computed on the cost price (or manufactured cost) of tangible personal property sold through the vending machines. This tax does not apply to non-vending machine dealers such as service station operators who use vending machines at their businesses to sell merchandise. These dealers are subject to the retail sales tax provisions.
Registration: Every individual, partnership, corporation, etc., desiring to engage in the business of placing vending machines for selling tangible personal property must file a Business Registration Application, Form R-1, or register online. A separate application must be filed for each locality in which vending machines are placed. Code of Virginia § 58.1-614(E)
Filing Procedure: Vending Machine tax return, Form VM-2, must be filed for each period showing the cost price or manufactured cost of tangible personal property sold through vending machines during the preceding period. The dealer must pay the amount of tax due at the time the return is filed.
Generally, dealers are required to file returns monthly and must submit the return by the 20th of the month following the end of the period. The Department determines annually which dealers should file and pay on a quarterly basis. Quarterly returns must be filed on or before the 20th of the month following the close of each quarterly period ending March 31, June 30, September 30 and December 31.
A return, voucher and schedule should be filed as soon as possible after the close of the reporting period but not later than the 20th day of the following month. A return must be filed for each reporting period even if no tax is due.
The VM-2 Package contains Form VM-2, Virginia Vending Machine Dealer’s Sales Tax Return; Form VM-2V, Virginia Vending Machine Dealer’s Sales Tax Voucher; Form VM-2A, Virginia Vending Machine Dealer’s Sales Tax Worksheet; and VM-2B, Schedule of Local Taxes.
Tax Rates: The tax rate is 6 percent (5 percent state tax and 1 percent local tax) of wholesale purchases. Dealers may also request authorization from the Tax Commissioner to report tax based on 5 percent of gross sales.
For additional information refer to Code of Virginia § 58.1-614.
In accordance with the provisions of Virginia Senate Bill 503, the administration and collection of the Motor Vehicle Fuel Sales Tax imposed in certain transportation districts will transition from the Virginia Department of Taxation to the Department of Motor Vehicles (DMV), effective July 1, 2013. If you are a registered distributor, no action is required by you with the Department of Taxation. We will automatically close your Motor Vehicle Fuel Sales Tax account at the end of June 2013. Please contact DMV for information regarding transactions or issues for periods beginning on or after July 1, 2013.
General Liability: A motor vehicle wholesale fuel sales tax is imposed on distributors of fuels to any retail dealer for retail sale in a Transportation District.
“Transportation District” refers to the Northern Virginia Transportation District, which was established by member localities as part of Code of Virginia § 15.2-4503.1. The Transportation District is comprised of the counties of Arlington, Fairfax, Loudoun, and the cities of Alexandria, Falls Church, and Fairfax and such other county or city contiguous to the District that agrees to join the District.
1. Federal government agencies
2. State and local government agencies
3. Nonprofit entities
4. Sales-for-resale and immediate transportation out of state or to a Transportation District.
Filing Procedure: On or before the 20th of each month, distributors are required to file Form DFT-1, Motor Vehicle Wholesale Fuel Sales Tax Return, showing the gross sales, gross proceeds, or cost price from all taxable sales of fuels made during the preceding calendar month. The distributor must pay the amount of tax due at the time the return is filed.
Tax Rate: The rate is 2.1 percent of the sales price charged by the distributor.
For additional information refer to Code of Virginia § 58.1-1720
Beginning January 1, 2011, a Prepaid Wireless E-911 fee of 50 cents is imposed on each retail purchase of prepaid wireless calling service. Dealers who sell prepaid wireless service must collect and remit the new fee, beginning with the month of January 2011. Learn more.
General Liability: The fee is levied for each new tire sold at retail in Virginia. The fee may be passed on to the retail customer if separately stated.
Fee Rate: Beginning July 1, 2011, the fee is 50 cents per tire, with certain exemptions (see below).
Registration: To register for the Tire Recycling Fee, retailers must file a Business Registration Application, Form R-1, with the Department of Taxation, or register online.
Filing Procedure: Every tire retailer must file the Tire Fee return, Form T-1, quarterly. The return is due and the fee payable on or before the 20th of the month following the end of each quarter of the calendar year. Quarterly periods end March 31, June 30, September 30 and December 31.
The fee imposed under § 58.1-641 shall not apply to new tires for:
- Any device moved exclusively by human power;
- Any device used exclusively upon stationary rails or tracks; or
- Any device used exclusively for farming purposes, except a farm truck.
For additional information please refer to Code of Virginia §58.1-640-644
General Liability: A fee is imposed on the in-room rental or purchase of digital media offered in guest rooms rented out for continuous occupancy for fewer than 90 days, such as hotels and motels.
Administering the Digital Media Fee
All charges for digital media are subject to the Digital Media Fee, with certain exemptions (see below). The fee is charged in addition to the cost of the rental of the room and is collected by the Provider, who then remits it to the Department.
A “Provider” is any person who offers the sale of digital media to guests in temporary lodgings located in Virginia. Digital Media providers must register with the Department.
Providers are required to collect the Digital Media Fee on taxable charges for digital media unless presented with a valid Retail Sales and Use Tax exemption certificate that exempts the customer from the Retail Sales and Use Tax on charges for the temporary lodging. In such cases, the Digital Media Fee shall not be collected.
As the Digital Media Fee is a fee on the purchase of a service, certificates of exemption from the Retail Sales and Use Tax on a purchase of tangible personal property will not relieve a customer from paying the Digital Media Fee.
Exemptions: The following are exempt from the Digital Media Fee, provided a valid exemption certificate is presented to exempt them of the Retail Sales and Use Tax on the lodging accommodation:
- Federal government agencies, when the reservation is made and paid for by the agency; and
- Nonprofit entities holding a valid exemption certificate issued by the Department, which specifically states it is valid for the purchase of “taxable services.”
Filing Procedure: Each Provider is required to file a monthly Form DM-1, Digital Media Fee Return, and remit the Digital Media Fee due on or before the 20th day of the month following the month in which the fee is billed. The Digital Media Fee must be reported on Form DM-1; the Digital Media Fee cannot be reported on the Provider’s Form ST-9, Retail Sales and Use Tax Return.
Tax Rate: The tax rate is 10 percent of the sales or rental price.
For additional information please refer to Virginia Tax Bulletin 09-5.
The Public Facilities Act provides a mechanism that allows a portion of the state sales tax revenues attributable to sales in new, renovated, or expanded public facilities in certain localities to be returned to the locality in which the facility is located. The locality is only entitled to the sales tax revenue generated by transactions taking place in the facility.
All businesses or persons making sales at the facility must register with the Department and report their sales and use tax on Form PF-1, Virginia Public Facility Sales Tax Return.
Last Updated 5/23/2013 12:7