Document Number
Tax Type
Retail Sales and Use Tax
Floral and gift transactions
Taxability of Persons and Transactions
Date Issued

February 21, 1997

Re: Request for Ruling: Retail Sales and Use Tax


This is in reply to your letter of January 23, 1996, in which you request a ruling on the application of the retail sales and use tax to floral and gift transactions by*********** (the "Taxpayer”).


The Taxpayer offers an online floral and gift service via the Prodigy and Internet systems that provides delivery of floral and gift items world wide and within the United States, including Virginia. The Taxpayer also utilizes an out-of-state telemarketing firm to solicit floral orders via an 800 number. The Taxpayer is physically located in Virginia, however, sales orders are transmitted to locations outside Virginia for processing.

The Taxpayer received a prior ruling from the department regarding similar online transactions involving sales of floral arrangements delivered via a floral network (Public Document 92-26 (4/20/92)). Since that time, the Taxpayer has broadened its use of online networks in offering an expanded product line that includes gift items other than floral arrangements. The Taxpayer requests a ruling on the application of the tax to its current online sales transactions in light of the enactment of a sales tax exemption for certain gift transactions set forth in the department's Tax Bulletin 95-5.


The 1995 Session of the General Assembly enacted an exemption from the sales and use tax for third party gift transactions, effective July 1, 1995. See Code of Virginia § 58.1-602, definition of "use." As explained in Tax Bulletin 95-5, issued June 23, 1995, the exemption applies to transactions in which a nonresident, by mail or telephone purchase order, directs a Virginia business to deliver personal property as a gift to another nonresident. The exemption is limited to gifts purchased by out-of-state residents by telephone or mail-order when delivered to out-of-state recipients. Gifts delivered to Virginia residents at the direction of out-of-state purchasers and gifts purchased by Virginia residents for delivery to out-of-state recipients remain taxable.

Since the sales orders are transmitted through the Prodigy and Internet systems via phone lines, such sales would qualify as orders received by telephone as required by the exemption. Under the third party gift transactions exemption, the Taxpayer would not be required to collect the Virginia tax on gift orders received from purchasers who are nonresidents of Virginia for delivery to nonresident recipients.

Because the Taxpayer is a dealer and satisfies the nexus requirements under Code of Virginia § 58.1-612, it is required to collect and remit the tax on sales orders received online from Virginia residents regardless of the point of delivery and sales orders delivered to Virginia recipients.

The policy set forth in this ruling is based on the facts presented. The Taxpayer is advised to seek another ruling from the department if its sales activities change from the facts as described in this case. If you have additional questions concerning this ruling, please contact *************at**********.


Danny M. Payne
Tax Commissioner


Last Updated 08/25/2014 16:46