Get Ready! Virginia Sales and Use Tax Changes

Moderator: Clare Dunn

Office of Customer Services

Presenter: Lee Mikelson

Director, Business & Analytic Services Division

2

House Bill 2313

Effective July 1, 2013

0.3 % increase Statewide

0.7 % increase Northern Virginia and Hampton Roads

3

Retail Sales and Use TaxGeneral State Sales & Use Tax Rate 4.3%Local State Sales & Use Tax Rate 1.0%Total 5.3%

Vending Machine Sales and Use Tax General State Sales & Use Tax Rate 5.3%Local State Sales & Use Tax Rate 1.0%Total 6.3%

Retail Qualifying Food SalesState Qualifying Food Sales Tax Rate 1.5%Local State Sales & Use Tax Rate 1.0%Total 2.5%

Statewide Increase0.3%

Regional Increase0.7%

NO CHANGEState Qualifying Food Sales Tax Rate 1.5%Local State Sales & Use Tax Rate 1.0%Northern VA and Hampton Roads Regions Total Tax 2.5%

General State Sales & Use Tax Rate

4.3%Local State Sales & Use Tax Rate

1.0%Regional Sales & Use Tax Rate

.7%Northern VA and Hampton Roads Regions Total Tax

6.0%

General State Sales & Use Tax Rate

5.3%Local State Sales & Use Tax Rate

1.0%Regional Sales & Use Tax Rate

.7%Northern VA and Hampton Roads Regions Total Tax

7.0%

4

Chesapeake City Isle of Wight County Poquoson City Surry County*

Franklin City James City County Portsmouth City Virginia Beach City

Gloucester County * Newport News City Southampton County Williamsburg City

Hampton City Norfolk City Suffolk City York County

New Regional Sales & Use Tax

Alexandria City Fairfax County Manassas City

Arlington County Falls Church City Manassas Park City

Fairfax City Loudoun County Prince William County

Northern VirginiaRegion

Hampton RoadsRegion

5

* Counties not subject to the regional retail sales and use tax as originally presented in the webinar. While both counties are members of the Planning District 23 Commission that is impacted by the additional tax, neither county is located within the planning district. See Virginia Tax Bulletin VTB 13-8 .

Revised Forms

Form ST-9 for in-state sales

Form ST-8 for out-of-state use

Form ST-7 for business consumer use

Form VM-2 for vending machine sales

Form ST-6 for direct payment permits

6

7

Sourcing

What is a locality?

What does sourcing mean?

What is an in-state sale?

What is an out-of-state sale?

8

What is a Locality?

• Cities are independent of counties

• 133 cities and counties as of July 1, 2013

• Cities + Counties = Localities

• Each locality has a unique FIPS code

• Only cities and counties may impose local sales and use tax

9

What does sourcing mean?

• Every sale must be assigned, or sourced, to a Virginia locality.

• The 1% local sales and use tax is distributed to the sourced locality.

Sourcing depends on:

• In-state sale

or

• Out-of-state sale

10

What is an in-state sale?

• The seller/dealer has physical presence in Virginia, and

• The purchaser is located in Virginia

In-state Sales Sourcing Rule

Source to the locality in which your business is located.

• If located in the Northern Virginia or Hampton Roads regions, charge the additional regional tax.

• If NOT located in the Northern Virginia or Hampton Roads regions, do not charge the additional regional tax.

11

What is an out-of-state sale?

• The dealer either has no physical presence in Virginia, or

• The dealer has physical presence in Virginia but has sales originating outside of Virginia

• The purchaser is located in Virginia

Out-of-state Sales Sourcing Rule

Source to the locality where the item is being delivered.

• If delivering in the Northern Virginia or Hampton Roads regions, charge the additional regional tax .

• If NOT delivering in the Northern Virginia or Hampton Roads regions, do not charge the additional regional tax.

Sourcing 101

In-state Dealers ST-9 Filers

Tax rate is determined by the dealer’s business location (point of sale)

FORM TYPE APPLICATION OF TAX RATE

Out-of-State ST-8 Filers

Tax rate is determined by the dealer’s destination where the item is shipped (point of delivery)

#1

#2

12

13

Use our FIPS Code Lookup Tool to determine:

• Where your business location is, or

• The locality of an address you are mailing to

Let’s take a look at the tool!

14

Remember – details and examples are provided in the HB 2313 Guidelines

Reporting Requirements

Single-Locality Filer

Consolidated Filer

Non-Fixed Filer

93%

2%

5%

15

Form ST-8 Out-of-State Dealers

Form ST-9 In-state Dealers

Transitional Rules

16

Contracts – General Rule

• Before April 3, 2013 – Delivered September 30, 2013

• Entitled to Request Refund

17

Bona Fide Real Estate Construction Contracts

• Contract entered into before April 3, 2013

• Must have finished plans and specifications

18

19

Tangible Personal Property (installment sales/layaway purchase)

• Before April 3, 2013 – Redeemed by September 30, 2013

• Entitled to Request Refund

20

Leases

• Lease/rental agreement entered into before April 3, 2013

• Leased property must be delivered to lessee by September 30, 2013

21

22

Final Questions

Get Ready! Virginia Sales and Use Tax Changes

Live Chat: http://www.tax.virginia.gov/

Telephone: (804) 367-8037