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Deb is the head of marketing at Numeral. He has worked with the likes of Shopify and Wonderment and has helped countless ecommerce stores scale seamlessly. With a background in finance, he often finds himself advising stores on sales tax and good financial systems.
January 10, 2024 Reviewed by
Kevin is a licensed CPA in the state of California. Prior to Numeral, Kevin operated multiple ecommerce businesses and worked at KPMG as a tax advisor.
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.
In this articleIf 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.
| State taxing authority | Virginia Department of Taxation |
|---|---|
| Virginia base sales tax rate | 5.3% |
| Local tax rates | 0% to 1.7% |
| 2023 Virginia sales tax rate | 5.3% - 7% |
| Tax threshold | $100,000 per year |
| Website | https://www.tax.virginia.gov/ |
| Tax Line | 804-367-8037 |
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%.
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%.
| General Sales Tax Rate | Locations |
|---|---|
| 7% | James City County, Williamsburg, York County |
| 6.3% | Charlotte County, Danville, Gloucester County, Halifax County, Henry County, Northampton County, Patrick County, Pittsylvania County |
| 6% | Central Virginia (Charles City, Chesterfield, Goochland, Hanover, Henrico, New Kent, Powhatan, and Richmond City), Hampton Roads (Chesapeake, Franklin City, Hampton, Isle of Wight, Newport News, Norfolk, Poquoson, Portsmouth, Southampton, Suffolk, and Virginia Beach), Northern Virginia (Alexandria, Arlington, Fairfax City, Fairfax County, Falls Church, Loudoun, Manassas, Manassas Park, and Prince William) |
| 5.3% | Everywhere else |
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.
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.
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.
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.
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
| Type of nexus | Threshold |
|---|---|
| Physical presence | Any physical presence, such as an office, warehouse, employees, etc. |
| Economic nexus | $100,000 in sales or 200 transactions |
You need a sellers permit in Virginia, unless your business falls within the list of businesses exempt from sales tax.
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.
Major categories of exemptions from sales tax in Virginia include:
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.
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.
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.
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.
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.
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.
Let’s look at how to file and pay sales and use tax 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:
| Period | Due Date |
|---|---|
| January | February 20 |
| February | March 20 |
| March | April 20 |
| April | May 20 |
| May | June 20 |
| June | July 20 |
| July | August 20 |
| August | September 20 |
| September | October 20 |
| October | November 20 |
| November | December 20 |
| December | January 20 |
| Period | Due Date |
|---|---|
| January – March (Q1) | April 20 |
| April – June (Q2) | July 20 |
| July – September (Q3) | October 20 |
| October – December (Q4) | January 20 |
Businesses that fail to file their sales tax returns on time may be subject to penalties. The penalties are:
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.
The due dates for filing sales tax returns in Virginia are:
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.
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.
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.
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.
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.
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.
Contesting audit findings with the auditor in Virginia helps you:
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.
Here are the steps for registering for sales tax in Virginia:
Once the registration is completed and verified by the tax authority, you will receive your permit to sell 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.
If you are an online seller, you must register for Virginia sales tax if you:
There is no cost to register for a sales tax license in Virginia.
For sales tax filing and appeals in Virginia, contact:
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.
Deb is the head of marketing at Numeral. He has worked with the likes of Shopify and Wonderment and has helped countless ecommerce stores scale seamlessly. With a background in finance, he often finds himself advising stores on sales tax and good financial systems.
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