Document Number
88-334
Tax Type
Retail Sales and Use Tax
Description
Out-of-state vendors; Collection of tax
Topic
Collection of Tax
Date Issued
12-20-1988
December 20, 1988


Re: Ruling Request/ Sales and Use Tax


Dear********************

This will reply to your letter of October 28, 1988 regarding the collection of the Virginia sales and use tax by out-of-state vendors.

In National Bellas Hess, Inc., v. Department of Revenue, 386 U.S. 754 (1967), the United States Supreme Court invalidated an attempt by Illinois to require the collection of Illinois sales tax by an out-of-state mail order company which made sales to Illinois residents. The Supreme Court ruled that states cannot require the collection of their sales tax by out-of-state vendors whose only contact within the state is the solicitation of orders by telephone or through the U.S. mails, provided the vendors also maintain no office or other business activity within the state.

Based on this Supreme Court decision, Virginia is currently prohibited from requiring many out-of-state mail order firms from collecting and reporting the tax in making sales to Virginia residents. However, many out-of-state mail order firms do collect Virginia sales and use tax, either because they have some type of office in the state or as a service to their customers who would otherwise become liable for Virginia use tax on items purchased from the firms.

Virginia Code §58.1-612, copy enclosed, requires the collection and reporting of the tax by out-of-state businesses that advertise, "in newspapers or other periodicals printed and published within this State, on billboards or posters located in this State, or through materials distributed in this State by
means other than the United States mail." (Emphasis added) ( See also, Virginia Retail Sales and Use Tax Regulation (VR) 630-10-29.1, enclosed). However, several states, including Tennessee, have enacted even broader sales tax collection and reporting requirements. Virginia has not enacted similar legislation.

Legislation is currently pending before the United States Congress which would have the effect of overturning the National Bellas Hess decision. If enacted, this legislation would permit the states to require large out-of-state mail order firms to collect and report sales and use tax on all items sold to in state residents, whether or not the firms maintain an office or have any other business activity within the state.

I hope that the foregoing has responded to your question, but let me know if you have any further questions.

Sincerely,



W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46