Tax Type
Retail Sales and Use Tax
Description
Nexus; Out-of-state manufacturer
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
11-07-1989
November 7, 1989
Re: Request for Ruling/Sales and Use Tax
Dear*********************
This will reply to your letter of August 11, 1989 in which you request a ruling as to the sales and use tax application to your client, (the Corporation), located outside the state of Virginia.
FACTS
The Corporation is located in New Jersey and does business solely in New Jersey. The Corporation is retained by certain businesses, both inside and outside the state of Virginia, to produce special order notepads. The notepads will bear the name of participating colleges and universities along with the name of the sponsoring business. The notepads will be shipped in bulk to the various colleges and universities located both within and outside the state of Virginia for distribution to the student body as part of the school's registration package. All deliveries into the state of Virginia will be done by common carrier. The sponsoring businesses will pay the corporation for the pads along with a distribution royalty fee which the Corporation will forward to the colleges. Based on the foregoing, you are requesting a ruling as to how the Virginia sales and use tax would apply to the Corporation.
RULING
§630-10-76 of the Virginia Retail Sales and Use Tax Regulations addresses out-of-state dealers and states the following:
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- Every person outside this state who engages in business in this state as a dealer (as defined in 630-10-29.1) is required to register and to collect and pay the tax on all tangible personal property sold or delivered for storage, use or consumption in this state. Such dealers must file returns and perform all other duties required of dealers in this state. out-of-state vendors who have not subjected themselves to the jurisdiction of this state in any way are encouraged to apply for a certificate of registration and to collect the use tax as a service to their Virginia customers.
In order to determine if an out-of-state dealer has sufficient activity within the state of Virginia to require that dealer to register for the collection of tax, we must look to §630-10-29.1 (copy enclosed) of the regulations. An out-of-state dealer is required to register for the collection of the tax if he 1) maintains or has within this state, directly or through an agent, an office, warehouse or other place of business; 2) solicits business in this state by employees, agents, or other representatives; 3) advertises in newspapers or other periodicals printed and published in this state; or 4) makes regular deliveries of tangible personal property within this state by means other than common carrier.
Based upon the information provided in your letter, it does not appear that your client would be required to register as a dealer in the state of Virginia. In order to make a definitive decision of your clients sales tax obligations, we would require more information on how your client solicits business from Virginia customers. Assuming your client is not required to register, your client's customers would be required to pay the Virginia use tax on all items delivered in this state on which no Virginia sales tax is charged. Therefore, the Corporation may wish to register with the department for the collection of the tax as a service to its customers. The rate of the Virginia sales and use tax is 4 1/2%. I have enclosed a Combined Registration Application Form for your client's use if he is required, or should he decide, to register as a dealer in the state of Virginia.
If you should have any further questions, please feel free to contact the department.
Sincerely
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner