Virginia – Tax Collection Requirements for Out-of-State Dealers to Begin

SALT Report 2903 – The Virginia Department of Taxation issued a bulletin regarding the retail sales tax collection requirements for certain out-of-state dealers that will take effect on September 1, 2013.

The collection requirements are a result of legislation enacted during the 2012 Session of the Virginia General Assembly, which requires certain out-of-state dealers to register and collect retail sales and use tax on sales made into Virginia.

The rebuttable presumption applies to out-of-state dealers that belong to a commonly controlled group that maintains a distribution center, warehouse, fulfillment center, office, or other similar location in Virginia that facilitates the delivery of tangible personal property sold by the out-of-state dealer.

For purposes of this requirement, a commonly controlled person is defined as any person that is a member of the same controlled group of corporations as the dealer, or any other entity that, regardless of its form of organization, has “the same ownership relationship to the dealer as a corporation that is a member of the same controlled group of corporations.”

However, if the dealer is able to establish that the activities conducted by the commonly controlled person in Virginia are not significantly associated with the dealer’s ability to establish or maintain a market in the State, the dealer can rebut this presumption.

Lastly, Senate Bill 597 provided that this legislation is effective either on September 1, 2013, or upon passage of federally enacted legislation that would allow states to require remote sellers to collect taxes on all taxable goods shipped to in-state customers.

Because federal legislation has not been enacted, the effective date for this legislation is September 1, 2013.  As a result, all out-of-state dealers who meet the criteria set forth above must begin collecting sales and use taxes on sales made into Virginia effective September 1, 2013.

For Further Information

Virginia Department of Taxation – Tax Bulletin 13-11

Virginia General Assembly – Senate Bill 597, Laws 2012