Document Number
Tax Type
Retail Sales and Use Tax
Nexus, Independent Contractors and Wholesale
Date Issued


May 9, 2018



Re:     Request for Ruling:  Retail Sales and Use Tax


Dear *****:


This will reply to your letter on behalf of your client (the “Taxpayer”), in which you request a ruling on Virginia's nexus requirements in regards to an out-of-state company making both wholesale and retail sales to Virginia customers.  I apologize for the delay in responding to your request.




The Taxpayer is located outside the state of Virginia.  The Taxpayer operates two separate sales divisions, one wholesale and one retail. The Taxpayer's wholesale division involves the wholesale sale of their products to both distributors and retailers for subsequent resale to the customers of the wholesalers and retailers.  The Taxpayer's retail division includes making retail sales throughout the country, including Virginia, via the Internet, telephone orders and mail orders.  All merchandise is delivered by common carrier or other third parties from the Taxpayer's out-of-state location.  The Taxpayer currently maintains no offices, warehouses, property or employees in Virginia associated with their business operations.  The Taxpayer does send advertising catalogs and other printed material into Virginia to promote their retail business.


The Taxpayer is considering contracting with one or more independent contractors in Virginia for the purpose of telemarketing by telephone and email to the Taxpayer's broad wholesale customer base across the country, but not to any customers of any type in Virginia. While the in-state independent contractors will not solicit business from any Virginia customers, separately, the Taxpayer will solicit wholesale sales from Virginia customers via independent contractors located in states other than Virginia.  The in-state independent contractors will perform the following functions for the Taxpayer.


  • Solicit primarily by phone or e-mail wholesale sales only from wholesale customers in states other than Virginia;
  • Submit proposed wholesale orders to the Taxpayer via the independent contractors personal computers;
  • Handle all concerns of the wholesale customer with regard to their order; and
  • Communication with Taxpayer regarding customer's order and customer relations.


The Taxpayer requests a ruling as to whether nexus has been established in Virginia, based on the actions of the independent contractors residing in Virginia, for the purpose of applying the Virginia retail sales and use tax to its wholesale or retail sales.




Under Virginia Code § 58.1-612, the sales tax is collectible from all persons who are dealers and have sufficient activity in Virginia to require registration under Virginia Code § 58.1-613.  Virginia Code § 58.1-612 defines the term “dealer” and provides those activities within Virginia by a dealer that would require the collection and remittance of the Virginia sales tax. Virginia Code § 58.1-612 B 3 provides that the term dealer shall include every person who, “sells at retail, or who offers for sale at retail, or has in his possession for sale at retail, of for use, consumption, or distribution, or for storage to be used or consumed in this Commonwealth, tangible personal property.”  Based on the information provided, the Taxpayer qualifies as a “dealer” as it is selling tangible personal property for use and consumption in Virginia.


Virginia Code § 58.1-612 C sets forth the “nexus” requirements that give the Commonwealth the authority to require a dealer to register for the collection and remittance of the sales tax.  Among other requirements, a dealer will have sufficient activity in Virginia to require it to register and collect the tax if the dealer (1) maintains or has within Virginia, directly or through an agent or subsidiary, an office, warehouse, or place of business of any nature, or (2) solicits business in Virginia by employees, independent contractors, agents or other representatives.


Virginia Code § 58.1-602 defines “business” to “include any activity engaged in by any person, or caused to be engaged in by him, with the object of gain, benefit or advantage, either directly or indirectly.”


The Taxpayer states that its independent contractors residing in Virginia will be soliciting business from the Taxpayer's wholesale customer base across the United States, but not to customers of any type in Virginia.  Based on the information provided and the cited statutory authorities establishing nexus within Virginia, I find that should the Taxpayer engage independent contractors that reside in Virginia for the purpose of soliciting sales, the Taxpayer would have sufficient activity to require registration with Virginia for the collection and remittance of the Virginia retail sales or use tax.


This ruling is based on the facts presented as summarized in this letter.  Any change in facts or the introduction of new facts may lead to a different result.


The Code of Virginia sections cited in this letter are available on line at in the Laws, Rules and Decisions section of the Department's website.  If you should have any questions concerning this ruling, please contact *****, in the Office of Tax Policy, Appeals and Rulings, at *****.




Craig M. Burns
Tax Commissioner




Last Updated 05/31/2018 12:25