Tax Type
Retail Sales and Use Tax
Description
Drop shipments into Virginia
Topic
Taxability of Persons and Transactions
Date Issued
03-10-1988
March 10, 1988
Re: Ruling Request: Retail Sales and Use Tax
Dear**************
This is in reply to your letter of June 20, 1987 in which you request a ruling regarding the applicability of the Virginia Retail Sales and Use Tax to the following transaction.
FACTS
*********(Corporation) is a Delaware corporation physically located in Delaware. They hold a certificate of registration for the collection of the Virginia Retail Sales and Use Tax. Your customer, who has a tax exemption certificate for the state of Maryland, asked that Corporation drop ship to one of their customers located in Virginia. Your customer has refused to remit the Virginia tax on the transaction maintaining that they are not responsible for the tax since they are reselling the product.
RULING
The transaction between Corporation and its Maryland customer is a nontaxable sale for resale, provided-that Corporation obtains a resale exemption certificate from the customer. The Maryland customer may, however, be required to collect the Virginia sales and use tax from the Virginia purchaser to whom the property was delivered. The requirements for the collection of the tax by out-of-state dealers are set forth in Virginia Code §58.1-612. In the event that the Maryland customer does not collect the Virginia tax on the property delivered to the Virginia purchaser, the purchaser will be subject to the Virginia use tax.
I hope that this answers your question and if I can be of any further assistance to you, please let me know.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner