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VirginiaSales Tax

A Complete Guide For Businesses

Automate My VirginiaSales Tax Filings

State Rate
5.30%

Local Tax
yes

Phone
(804) 367-8037

General requirements

Virginia is an origin-based state (sales are taxed where the seller is located).

  • Sales tax is charged on the gross receipts of the retail sale or lease of tangible personal property (TPP)
  • For manufacturers, purchases used for production aren’t taxed
  • For distributors, items purchased for resale aren’t taxed

Businesses are required to file and pay taxes online. You have 3 options to do this:

Rates

The sales tax rate is 5.3% (4.3% state tax and 1% local tax).

For Northern Virginia and Hampton Roads: an additional 0.7% state tax is imposed, making the rate in these areas 6% (5% state tax and 1% local tax).

How food is taxed

For food purchased for home consumption the rate is 2.5% (1.5% state, 1% local). This reduced rate only applies to grocery items and cold prepared foods packaged for home consumption (not hot prepared foods sold for immediate consumption).

Businesses that serve food are not eligible for the reduced rate when:

  • Gross receipts from the sale of food for immediate consumption constitutes more than 80% of the total gross receipts of the establishment
  • A retail establishment that also sells motor fuel shall include these sales towards its total gross receipts

Because food sold by most fast food establishments and restaurants does not qualify for the reduced rate due to the 80% rule, it is not necessary to keep separate records for take-out orders.

More information on food that qualifies for the tax rate reduction.

Nexus in Virginia

If you’re an out-of-state seller who has nexus in Virginia, you must register with Virginia to collect Use Tax on Virginia sales. Once your business is registered with Virginia, you must file a monthly return by the 20th of the month after the sale. Also, you must file even when you have no sales to report.

As an out-of-state seller, you file Form ST-8.

These foods qualify for the tax rate reduction.

Filing schedule

Both the return and payment are due on the 20th of the month following the filing period. Filing frequency is monthly, but the state may notify you and change your filing frequency to quarterly depending on your tax liability.

Registering to collect sales tax in Virginia

You will register your business with the state of Virginia by completing a registration application online. The state will issue a Certificate of Registration (From ST-4) which must be displayed at your place of business.

Penalties

Interest is charged and penalties are assessed for underpayment, late filing, and late payment as follows:

  • Late Filing Penalty: If more than 6 months after the due date, the penalty is applied at a rate of 30% of the tax due at the time of assessment
  • Late Payment Penalty If more than 6 months after the due date, the penalty is applied at a rate of 30% of the tax due at the time of assessment, but a late payment penalty will not be imposed in any month for which a late filing penalty has been assessed

When you file a late return online, penalties and interest are automatically calculated.

See how easy it is to automate your sales tax filings.

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