Tax Type
Retail Sales and Use Tax
Description
Vendor registration; Distributors
Topic
Returns/Payments/Records
Date Issued
10-13-1993
October 13. 1993
Re: Request for Ruling: Retail Sales and Use Tax
Dear***************
This will reply to your letter of August 26, 1993 in which you request a ruling on registration procedures and other requirements in Virginia for retail sales and use tax purposes for**********(the "Taxpayer").
FACTS
The Taxpayer is a multi-level marketing company. The Taxpayer has collected sales and use tax on retail sales and remitted it to the department on behalf of its distributors. You indicate that one of the Taxpayer's Virginia distributors was recently told that it must obtain a "license" even though the Taxpayer is collecting and remitting sales and use tax on their behalf. You request a ruling regarding registration procedures and other requirements in Virginia for the Taxpayer and its authorized distributors.
RULING
Va. Code §58.1-612 and Virginia Regulation (VR) 630-10-29.1 (copies enclosed) set forth the "nexus" requirements which give the Commonwealth the authority to require dealers to register for collection and remittance of the sales tax. Each independent distributor of the Taxpayer would be considered a dealer for sales and use tax purposes, as each sells at retail, or offers for sale at retail, tangible personal property in Virginia. Generally, each distributor would be required to register to collect the Virginia sales and use tax. In order to register, a dealer must complete Form R-1 (copy enclosed).
In certain situations, the department has agreed to allow a multi-level marketer to collect and remit sales tax on behalf of its independent distributors. Enclosed is a copy of a sample agreement entered into by the department and a taxpayer with operations in Virginia similar to those described in your letter.
The department analyzes each situation on a case-by-case basis, and a determination is made as to whether a special registration arrangement is warranted. If you desire such a determination, edit and complete the agreement as appropriate, and return it, along with a description of all relevant facts regarding the Taxpayer's operations, to the Department of Taxation, Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23282-1880. If you have questions, you may contact********** of the Office of Tax Policy at*********.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/7301F
Rulings of the Tax Commissioner