TITLE 23. TAXATION
DEPARTMENT OF TAXATION
REGISTRAR'S NOTICE: The Department of Taxation is claiming an exemption from the Administrative Process Act in accordance with (i) § 2.2-4006 A 3 of the Code of Virginia, which excludes regulations that consist only of changes in style or form or corrections of technical errors and (ii) § 2.2-4006 A 4 a of the Code of Virginia, which excludes regulations that are necessary to conform to changes in Virginia statutory law where no agency discretion is involved. The Department of Taxation will receive, consider and respond to petitions by any interested person at any time with respect to reconsideration or revision.
Final Regulation
Title of Regulation: 23VAC10-210. Retail Sales and Use Tax (amending 23VAC10-210-220, 23VAC10-210-250, 23VAC10-210-3080).
Statutory Authority: § 58.1-203 of the Code of Virginia.
Effective Date: March 4, 2009.
Agency Contact: Jennifer Lewis, Tax Policy Analyst, Department of Taxation, P.O. Box 27185, Richmond, VA 23261-7185, telephone (804) 371-2341, FAX (804) 371-2355, or email jennifer.lewis@tax.virginia.gov.
Summary:
The amendments reflect the 2004 retail sales and use tax rate increase and conform the regulations to the Form, Style, and Procedure Manual for Publication of Virginia Regulations.
23VAC10-210-220. Brackets for collection of the tax.
A. The rate of the sales and use tax is 4.5% 5.0%,
which is comprised of a 3.5% 4.0% state tax and a 1.0% local tax
applicable throughout Virginia. (See 23VAC10-210-6040 through 23VAC10-210-6043
for special tax rate and provisions applicable to sales through vending
machines.) The bracket system is used to eliminate fractions of $.01 and must
be used to compute the tax on transactions of $5.00 or less. On transactions
over $5.00, the tax is computed at a straight 4.5%. One 5.0%, with
one half cent or more treated as $.01. Any dealer who collects the tax in
accordance with the bracket system set forth herein shall not be deemed to have
overcollected over collected the tax. (For overcollection For
over collection of the tax generally, see 23VAC10-210-340 D.) D.
B. The bracket system does not relieve the dealer from the liability
to pay an amount equal to 4.5% 5.0% of his gross taxable sales.
However, there is one exception. If if the dealer can prove to
the department that more than 85% of the gross taxable sales for the period was
were from individual sales of $.10 or less (and that he was unable to
adjust his prices to avoid the situation) in such manner as to
prevent the economic incidence of the sales tax from falling on him), the
department will determine the proper tax liability of the dealer based on the
portion of gross taxable sales that came from sales of $.11 or more. Any dealer
who may claim this exception must file with each return a separate statement
explaining his claim in detail for consideration by the department.
C. Below is the bracket system for the combined state and
local tax of 4.5% 5.0% on transactions of $5.00 or less:
$0.00 to $0.11 no tax
0.12 to 0.33 $.01 tax
0.34 to 0.55 $.02 tax
0.56 to 0.77 $.03 tax
0.78 to 0.99 $.04 tax
1.00 to 1.22 $.05 tax
1.23 to 1.44 $.06 tax
1.45 to 1.66 $.07 tax
1.67 to 1.88 $.08 tax
1.89 to 2.11 $.09 tax
2.12 to 2.33 $.10 tax
2.34 to 2.55 $.11 tax
2.56 to 2.77 $.12 tax
2.78 to 2.99 $.13 tax
3.00 to 3.22 $.14 tax
3.23 to 3.44 $.15 tax
3.45 to 3.66 $.16 tax
3.67 to 3.88 $.17 tax
3.89 to 4.11 $.18 tax
4.12 to 4.33 $.19 tax
4.34 to 4.55 $.20 tax
4.56 to 4.77 $.21 tax
4.78 to 4.99 $.22 tax
5.00 $.23 tax
|
Sales Price |
Tax Due |
|
0.01 to 0.09 |
0 |
|
0.10 to 0.29 |
0.01 |
|
0.30 to 0.49 |
0.02 |
|
0.50 to 0.69 |
0.03 |
|
0.70 to 0.89 |
0.04 |
|
0.90 to 1.09 |
0.05 |
|
1.10 to 1.29 |
0.06 |
|
1.30 to 1.49 |
0.07 |
|
1.50 to 1.69 |
0.08 |
|
1.70 to 1.89 |
0.09 |
|
1.90 to 2.09 |
0.1 |
|
2.10 to 2.29 |
0.11 |
|
2.30 to 2.49 |
0.12 |
|
2.50 to 2.69 |
0.13 |
|
2.70 to 2.89 |
0.14 |
|
2.90 to 3.09 |
0.15 |
|
3.10 to 3.29 |
0.16 |
|
3.30 to 3.49 |
0.17 |
|
3.50 to 3.69 |
0.18 |
|
3.70 to 3.89 |
0.19 |
|
3.90 to 4.09 |
0.2 |
|
4.10 to 4.29 |
0.21 |
|
4.30 to 4.49 |
0.22 |
|
4.50 to 4.69 |
0.23 |
|
4.70 to 4.89 |
0.24 |
|
4.90 to 5.00 |
0.25 |
For differential rate on fuels for domestic consumption, see 23VAC10-210-630.
23VAC10-210-250. Cash and trade discounts.
A. The following words and terms, when used in this regulation,
section shall have the following meanings, unless the content
clearly indicates otherwise:
"Cash or trade discount" includes a discount for the early payment of the purchase price, a discount attributable to the value of an item taken in trade, or a discount based upon the method of payment.
B. Cash and trade discounts taken on sales are not includible in the sales price for purposes of computing the tax. The amount of such discounts may be deducted from gross sales provided the discounts have been included in gross sales.
C. In computing the amount of a discount which that
may be subtracted from gross sales, the discount must be allocated between
sales price and sales tax. The following examples illustrate the application of
this concept.
Example 1: Dealer A sells an item to a customer for $100 and
bills the customer $100 for the item and $ 4.50 $5.00 for the
tax. The terms of the sale provide for a 10% discount if the bill is paid
within 30 days. The customer pays within 20 days and is therefore entitled to
the discount, which is computed as follows:
|
Amount Billed |
|
|
Sales Price |
|
|
Tax |
|
|
Less |
$10.00 discount |
|
Sales price discount |
100.00 x l0% = 10.00 |
|
Tax discount |
|
Therefore, the customer remits $94.05 $94.50,
which includes $90 in sales price and $4.05 $4.50 in sales tax.
Dealer A may deduct $10.00 from gross sales, and will accordingly remit only $4.05
$4.50 in tax.
Example 2: Dealer B sells an item to a customer for $100 and
bills the customer $100 for the item and $4.50 $5.00 for the tax.
The terms of the sale provide for a $10 discount if the bill is paid within 30
days. The customer pays within 20 days and is therefore entitled to the
discount, which is computed as follows:
|
Amount Billed |
|
|
Sales Price |
|
|
Tax |
|
|
Less |
$10.00 discount |
|
|
$10.00 / |
|
|
|
Therefore, the customer remits $ 94.50 $95.00,
which includes $ 90.43 $90.48 in sales price and $ 4.07 $4.52
in sales tax. Dealer B may deduct $ 9.57 $9.52 from gross sales,
and will accordingly remit only $ 4.07 $4.52 in tax.
Example 3: Dealer B repairs a piece of equipment for a
customer and bills the customer $100 for parts, $50 for labor, and $ 4.50
$5.00 for tax. The terms of the sale provide for a $10 discount if the
bill is paid within 30 days. B pays within 20 days and earns the discount which
is computed as follows:
|
Amount Billed |
|
|
Sales Price of Parts |
|
|
Separately Stated Repair |
|
|
Sales tax |
|
|
Less $10.00 discount attributed as follows: |
|
|
Attributable to Parts: (100 / $150) x $10.00 |
|
|
$3.33 attributable to nontaxable labor |
|
Therefore, the customer remits $ 144.50 $145.00,
which includes $ 93.62 $93.65 in sales price for the parts, $
4.21 $4.68 in sales tax attributable to the parts, and $46.67 for
nontaxable labor. Dealer B may deduct $ 6.38 $6.35 from gross
sales and will accordingly remit only $ 4.21 $4.68 in tax.
Regardless of whether a cash or percentage discount is used, the discount must be allocated between the sales price and the tax to avoid overcollection of the tax.
23VAC10-210-3080. Returned goods.
A. Generally. A dealer may deduct from gross sales any portion of the sales price of tangible personal property returned by a customer provided that such amount has been refunded to or credited to the account of the purchaser. Adequate records must be kept to disclose the essential facts.
B. Returns before tax paid by dealer. If a dealer refunds or credits to a customer's account all or any portion of the sales price of returned goods and has not yet paid the sales tax to the department, such portion of the sales price may be deducted from gross sales by the dealer in the appropriate place on his return for the period.
For example, Example 1. Customer A purchases a
sweater from Dealer B for $20.00 and pays to B the appropriate $.80 $1.00
sales tax. A returns the sweater the same day and B refunds $20.80 $21.00. If
the sale was included in gross sales for the month, B may deduct the $20.00
sales price of the sweater.
C. Returns after tax paid by dealer. If a dealer refunds or credits to a customer's account all or any portion of the sales price of returned goods after the dealer has paid the tax on the goods to the department, such portion may be deducted from gross sales on the dealer's return for the period in which the refund was made or credit given.
For example, in Example 2. In December Customer
C purchases a bed from Dealer D for $700 and pays the $28 $35
tax. C returns the bed to D in January and D credits C's account for $728
$735. In reporting gross sales for January, D may deduct the $700
sales price of the bed reported in a previous month.
D. Refund or credit for returned goods. If a dealer as
described in subsection C above of this section has insufficient
gross sales during the period in which goods are returned or a refund/credit
issued to absorb the amount of the sales price of the returned goods, the dealer
may carry the deduction forward as a credit against gross sales until used. If
any portion of such credit has not been used by the time a dealer ceases
business or if a dealer is no longer engaged in making retail sales, he may
request a refund for any portion of the unused credit for returned goods. The
amount of refund will be the net amount of tax remitted, therefore, if a dealer
deducted dealer's discount in filing his original return, such discount shall
similarly be deducted from the amount to be refunded. The following
example illustrates this concept.
Example:. Customer E purchases equipment from
Dealer G in January for $10,000 and pays the $400 $500 sales tax.
The transaction is reported on G's January sales tax return which is filed
timely. E returns the equipment in April and G refunds to E $8,000 of the
sales price and the applicable tax of $320 $400. G's gross sales
for April are only $5,000, therefore, only $5,000 of the amount refunded may be
used as a credit. G goes out of business on April 30 and applies for refund of
the tax attributable to the remaining $3,000 of sales price which was refunded.
G will be issued a refund of $117.30 $146.40 computed as follows:
(Sales Price X 4% 5.0% tax) - dealer's discount
= Refund ($3,000 X 4%) 5.0% tax) - (3% (4.0% X $90)
= $117.30 $146.40
E. Sales of returned goods. When any returned tangible personal property is resold, the sale is subject to the sales tax.
VA.R. Doc. No. R09-1734; Filed January 12, 2009, 10:25 a.m.