23 Va. Admin. Code § 10-210-2070

Current through Register Vol. 41, No. 4, October 8, 2024

Section 23VAC10-210-2070 - Situs of sale

A. Definitions. The following words and terms when used in this section shall have the following meanings unless the context clearly indicates otherwise:

"Hampton Roads Region" means the Counties of Isle of Wight, James City, Southampton, and York and the Cities of Chesapeake, Franklin, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, and Williamsburg.

"Local sales and use tax" means the local retail sales and use tax imposed by ordinance in all Virginia cities and counties at the rate of 1.0%.

"Northern Virginia Region" means the Counties of Arlington, Fairfax, Loudoun, and Prince William and the Cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park.

"Place of business" means the business location in Virginia that first takes the purchaser's order, whether in person, by purchase order, or by letter or telephone, regardless of the location of the merchandise or the point of acceptance of the order or shipment. "Place of business" includes a store, a sales or other office, or any warehouse.

"Regional sales and use tax" means the additional state retail sales and use tax imposed in the Hampton Roads Region and the Northern Virginia Region at the rate of 0.7%.

B. Sourcing.

1. Sales tax. Sales by dealers located in Virginia are generally subject to the sales tax and sourced to the city or county of the place of business of the dealer collecting the tax, without regard to the city or county of possible use by the purchaser. The sale of tangible personal property at the place of business of the seller is sourced to that place of business, even if the goods are ultimately delivered to the purchaser at another location. The remote sale (by telephone, Internet, or mail order) of tangible personal property from an in-state dealer with a place of business in Virginia is sourced to the location in which the order was first taken, even if the goods are ultimately delivered to the purchaser at another location. Accordingly, an order placed for merchandise in a store in County A, forwarded by the store in County A to a sales office in City B and shipped to the purchaser from a warehouse or branch store in County C is a sale made in County A.

Example 1: Dealer A makes a sale to a customer at his place of business in the City of Fairfax in the Northern Virginia Region. Dealer A has the goods delivered to the customer in Loudoun County in the Northern Virginia Region. The sale is sourced to the City of Fairfax. Dealer A should collect 6.0% (4.3% state, 0.7% Regional, and 1.0% local) sales tax on the purchase. The 1.0% local tax should be sourced to the City of Fairfax.

Example 2: Dealer B makes a sale to a customer at his place of business in Loudoun County in the Northern Virginia Region, but the goods are delivered to the customer in Roanoke County, which is not in the Northern Virginia or Hampton Roads Region. The sale is sourced to Loudoun County, in the Northern Virginia Region. Dealer B should collect 6.0% sales tax on the purchase. The 1.0% local tax should be sourced to Loudoun County.

Example 3: Customer C orders merchandise from Dealer D by placing a call to Dealer D's store, located in the City of Newport News in the Hampton Roads Region. The goods will be shipped to Customer C's residence that is neither in the Hampton Roads nor the Northern Virginia Region. The sale is sourced to the City of Newport News in the Hampton Roads Region. Dealer D should collect 6.0% (4.3% state, 0.7% Regional, and 1.0% local) sales tax on the purchase. The 1.0% local tax should be sourced to the City of Newport News.

Example 4: Customer E orders merchandise from Dealer F's website, which has a place of business and warehouse in North Carolina. Dealer F is registered to collect the Virginia retail sales and use tax. The invoice indicates that the merchandise will be shipped to Customer E's residence in the City of Richmond, which is outside the Northern Virginia and Hampton Roads Regions. Because Dealer F's place of business and warehouse are located outside of Virginia, the sale is sourced to the location in which the merchandise is delivered, the City of Richmond, which is outside the Northern Virginia and Hampton Roads Regions. Dealer F should collect 5.3% (4.3% state and 1.0% local) sales tax on the purchase. The 1.0% local tax should be sourced to the City of Richmond.

2. Use tax collected by dealers. The use tax is generally sourced to the city or county where the goods are used or consumed by the purchaser, or stored for use or consumption. An out-of-state dealer who has a place of business in Virginia is required to register as a dealer at that place. If the same dealer, at a place of business outside this state, receives orders from Virginia customers directly and not through a place of business in Virginia, he must also register as an out-of-state dealer. Out-of-state dealers who hold Certificates of Registration to collect the use tax from their customers must source sales into Virginia according to the city or county of destination.

Example 1: Dealer A makes Internet sales from his place of business in North Carolina. Dealer A holds a Certificate of Registration to collect the use tax from Virginia customers. Dealer A makes a sale and ships the goods to the City of Fairfax. Dealer A would collect 6.0% (4.3% state, 0.7% Regional, and 1.0% local) use tax on the sale. The 1.0% local tax should be sourced to the City of Fairfax.

3. Consumer use tax. Generally, Virginia residents and others purchasing goods from a business that does not collect the Virginia retail sales and use tax or purchasing goods tax-free while outside Virginia and bringing them into Virginia are subject to the consumer use tax. The use tax is sourced to the city or county where the goods are used or consumed by the purchaser, or stored for use or consumption. For more information on use tax, see 23VAC10-210-6030.

Any person purchasing tangible personal property in other areas of the Commonwealth for use in either the Hampton Roads Region or the Northern Virginia Region is not responsible for the regional consumer use tax if the retail sales and use tax has been paid on the purchase.

Example 1: Customer A, who is located in the City of Fairfax, makes an Internet purchase of tangible personal property from a West Virginia dealer who does not hold a Virginia Certificate of Registration and does not collect the use tax from Virginia customers. Customer A must remit 6.0% (4.3% state, 0.7% regional, and 1.0% local) use tax on the purchase.

Example 2: Customer B is located in the City of Charlottesville. Customer B buys equipment in Charlottesville that is intended for use performing a construction contract in Fairfax County and pays 5.3% sales tax. Customer B subsequently moves the equipment into Fairfax County. Customer B does not owe the 0.7% regional use tax on the equipment as the sales tax has been paid.

23 Va. Admin. Code § 10-210-2070

Derived from VR630-10-84; revised July 1969; January 1, 1979; amended, eff. January 1, 1985; Amended, Virginia Register Volume 32, Issue 22, eff. 9/12/2016.

Statutory Authority: § 58.1-203 of the Code of Virginia.