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If you run a business in Virginia, this guide will walk you through all the information you need to collect and remit your taxes on time.
Sales tax at a glance
Virginia sales tax rates & calculations in 2023
The Virginia sales tax rate in 2023 is 5.3% to 7%. This comprises a base rate of 5.3% plus a mandatory local rate of up to 1.7%. Depending on the local sales tax jurisdiction, the total tax rate can be as high as 7%.
List of local sales tax rates in Virginia
The sales tax rate for most locations in Virginia is 5.3%. Several areas have an additional regional or local tax, as outlined below. In all of Virginia, food for home consumption (e.g., grocery items) and certain essential personal hygiene items are taxed at a reduced rate of 1%.
FAQs
How do you calculate Virginia sales tax?
To calculate Virginia sales tax, you can use the following formula:
Sales tax = (base rate + local rate) * purchase price
For instance if the base rate is 5.3%, the local rate is 1%, and the purchase price is $100, then the sales tax would be $6.30.
What are the penalties for not paying Virginia sales tax?
If you fail to file or pay the full Virginia sales tax amount owed by the due date, a 6% per month penalty is added to the unpaid tax, up to a maximum of 30%.
Interest accrues daily on unpaid tax at the federal underpayment rate plus 2%. Even filing a late return without tax due results in a minimum $10 penalty.
What’s the difference between destination-based and origin-based sales tax states?
Destination-based sales tax is calculated based on the location where the purchase is delivered to or received by the customer. Origin-based sales tax is calculated based on the location of the seller.
Is the Virginia sales tax destination-based or origin-based?
Virginia is a origin-based sales tax state. Out-of-state sellers must collect tax based on the address that the product is shipped from.
Is Virginia a streamlined sales tax state?
Virginia is not a Streamlined Sales Tax State.
The Streamlined Sales Tax Project (SSTP) aims to simplify sales tax collection across states that adopt its Streamlined Sales and Use Tax Agreement (SSUTA), and Virginia still needs to join the SSTP or implement the SSUTA.
Sales tax nexus and registration
Sales tax nexus table in Virginia
FAQs
Do I need a Virginia seller's permit if I’m only a wholesaler?
You need a sellers permit in Virginia, unless your business falls within the list of businesses exempt from sales tax.
Do I need a Virginia seller's permit if I only sell temporarily in the state?
Even temporary selling activities in Virginia generally create a sales tax nexus requiring a seller's permit. This includes presence at conventions, trade shows, fairs, etc. Some limited isolated sales may be exempt, but check with the Virginia Department of Taxation for exceptions.
Exemptions from sales tax in Virginia
Major categories of exemptions from sales tax in Virginia include:
- Food purchased for home consumption
- Prescription drugs
- Textbooks
- Certain agricultural supplies
- Manufacturing equipment
- Research and development equipment
Disposable plastic bag tax
Any city or county in Virginia may impose a 5₵ tax on each disposable plastic bag provided to shoppers in local grocery stores, convenience stores, and pharmacies. The city or county must pass an ordinance to apply this tax.
The store collects the tax at the time of the sale. Money raised by this tax goes to support environmental cleanup, litter and pollution mitigation, or environmental education efforts or to provide reusable bags to recipients of SNAP or WIC benefits.
FAQs
Are groceries taxable in Virginia?
Most groceries for home consumption are taxed at a reduced rate of 1% throughout Virginia. However, prepared foods, alcohol, and tobacco are taxable at regular rates.
Is clothing taxable in Virginia?
Clothing and footwear is subject to regular sales tax in Virginia.
However, on a Virginia sales tax holiday, clothing and footwear items under $100 per item are exempt from Virginia sales tax. Items over $100 are taxable at the normal rate.
Are digital products taxable in Virginia?
No, digital products like ebooks, digital music downloads, streaming services, etc., are not taxable in Virginia unless it is an integral part of a tangible product—like operating systems that are installed on computers.
Is software-as-a-service (SaaS) taxable in Virginia?
No, SaaS is not generally taxable in Virginia. The same rules of digital products apply to SaaS where it is only taxed when the SaaS is part of a tangible product.
Are services taxable in Virginia?
Services are generally exempt from taxes in Virginia. However, they’re taxed if they’re part of a tangible product like lodging, transport, amusement part, etc.
Filing & paying sales tax in Virginia
Let’s look at how to file and pay sales and use tax in Virginia.
Sales tax return filing schedule and due dates in Virginia
The Virginia Department of Taxation assigns a filing frequency to businesses based on their anticipated taxable sales. This schedule is either monthly or quarterly.
The following due dates apply to Virginia sales tax returns:
Monthly:
Quarterly:
Filing penalties in Virginia
Businesses that fail to file their sales tax returns on time may be subject to penalties. The penalties are:
- 6% per month on unpaid tax up to a maximum of 30%
- Minimum $10 penalty for late filing even with no tax due
- Interest charges accrue daily at the federal underpayment rate plus 2%
When are returns due in Virginia?
The due date for filing returns in Virginia is the 20th of the month following the end of the filing period.
For example, if you file quarterly and the filing period ends on March 31, your return is due on April 20.
FAQs
What are the Virginia sales tax due dates?
The due dates for filing sales tax returns in Virginia are:
- Monthly: 20th of the following month
- Quarterly: April 20, July 20, October 20, January 20
I didn’t collect any Virginia sales tax during this period. Do I still need to file a return?
You still need to file a Virginia sales tax return even if you didn't collect any sales tax. Simple enter 00 in the tax amount.
Can I get an extension on filing my Virginia sales tax return?
Virginia allows an automatic 6-month extension on filing your taxes in Virginia (generally due by November 1). However, you are still required to pay your taxes on time to avoid penalties.
Can I amend a Virginia sales tax return?
Yes, you can file an amended Virginia sales tax return. You must pay any additional tax owed, applicable interest, and penalties. Use Form ST-9A or Form ST-8A depending on the type of business.
What is the penalty for filing and/or paying Virginia sales tax late?
Virginia has a 6% per month penalty for late filing or incorrect filings, up to a maximum of 30%. Interest of federal underpayment rate plus 2% also applies to any unpaid tax. The minimum penalty is $10 even for returns with no tax due.
Audit & appeals process in Virginia
The audit & appeals process is a series of steps a business must go through if the Virginia Department of Taxation audits them. The process begins with the auditor contacting the business to schedule an audit.
The auditor will then review the business's records and tax returns to determine if any sales tax was not paid. If the auditor finds any discrepancies, they will report their findings.
The business then has the opportunity to appeal the findings. If the appeal is denied, the business can then appeal to the Virginia Tax Commissioner.
Virginia sales tax audit process
The Virginia sales tax audit process is as follows:
- Auditor contacts business to schedule audit
- Auditor reviews records and tax returns
- Auditor issues report with findings
- Businesses can appeal audit findings
- If the appeal is denied, a business can further appeal to the Tax Commissioner
What to expect during the audit?
During a Virginia sales tax audit, the auditor will review your books, records, tax returns, and source documents. This includes sales invoices, bank statements, purchase orders, and financial statements. You must provide access to your accounting system and answer any questions.
After the audit – Appealing the results
Contesting audit findings with the auditor in Virginia helps you:
- Provide additional documentation to support your position
- Negotiate a settlement or payment plan
- Avoid further penalties and interest
If you disagree with the auditor's final determination, you can file a written appeal with the Tax Commissioner within 90 days. Further appeals can be made to the Virginia Tax Court.
Sales tax registration in Virginia
Here are the steps for registering for sales tax in Virginia:
- Visit the Virginia Business registration page.
- Click Register Your Business Now and you’ll be redirected to the iReg Login page
- Then, click the “Are you a new Business? Register Here” link.
- Start by filling in the form required to complete the registration
Once the registration is completed and verified by the tax authority, you will receive your permit to sell in Virginia.
How to file sales tax in Virginia
There are several different ways to electronically file and pay your sales tax. If you are unable to file and pay electronically, you must submit an electronic filing waiver request.
- In-state dealers file Form ST-9 and collect sales tax based on the rate at your business location (point-of-sale).
- Out-of-state dealers file Form ST-8 and collect sales tax based on the rate at the destination of the shipment or delivery (destination-based sales tax).
- In-state marketplace facilitators who are unable to associate an order with a physical place of business in Virginia may use destination-based sourcing to determine sales tax rates.
Registration requirements for online sellers in Virginia
If you are an online seller, you must register for Virginia sales tax if you:
- Have over $100,000 in Virginia sales or 200+ transactions
- Have a physical presence in Virginia
- Target Virginia customers through advertising, etc.
- Sell through a Virginia-based marketplace facilitator
Cost of registration for a Virginia sales tax license
There is no cost to register for a sales tax license in Virginia.
Agencies to register with in Virginia
- Virginia Tax
- Your local Commissioner of Revenue
More information for Virginia
For sales tax filing and appeals in Virginia, contact:
- Virginia Tax
- Phone: 804-367-8037
- Website: www.tax.virginia.gov
There you have it—an in-depth guide on Virginia's sales tax regime. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.
