FIN-032: Collecting, Reporting, and Remitting Virginia Sales Tax
Academic Division and the College at Wise.
- Exceptions for Collecting Sales Tax
- Reporting Sales Tax
- Remittance of Sales Tax Receipts
- Compliance with Policy
The University is committed to complying with applicable state and local sales tax laws and regulations. University requirements have been established for collecting, reporting, and remitting sales tax in order to avoid penalties for failure to timely file complete and accurate tax returns.
The individual responsible for a University unit or department that performs a service.
A financial connection between a state and a non-resident seller sufficient to permit the state to assert its taxing authority over the seller (as defined by the US Supreme Court). Economic nexus is established when a seller exceeds the threshold number of transactions and/or dollar amount of sales in a given state. Once economic nexus is established, the state can require the vendor to collect and remit sales tax for products shipped into that state.
Any state or territory in the United States other than the Commonwealth of Virginia.
Tangible Personal Property (1):
Property, other than real property, which may be seen, weighed, measured, felt, or touched, or is in any other manner perceptible to the senses. Under Virginia law, the term "tangible personal property" does not include stocks, bonds, notes, insurance, or other obligations or securities (as defined in VA Code § 58.1-602).
The University is exempt from paying sales and use tax on most of its purchases, but no similar exemption exists when the University is the seller. Consequently, the University must collect, report, and remit applicable sales tax to the Commonwealth of Virginia and to any state in which it has established economic nexus. Financial Reporting and Operations files and remits sales tax on behalf of the University.
The University monitors foreign state sales to ensure that sales tax is collected and remitted at the correct rate in any jurisdictions where the University has established economic nexus. Departments and activity heads must collect Virginia state and local sales tax on behalf of the University for:
- The sale of all tangible personal property, except for:
- Textbooks sold to University students; and
- Retail sales of meals to students or others, if the price of the meals is included in room, board, or tuition and fee charges.
- Any services included in the sale of tangible personal property which are not charged separately;
- The fabrication of tangible personal property for consumers, who furnish, either directly or indirectly, the materials used in fabrication; and
- The furnishing, preparing, or serving for a fee of any tangible personal property consumed on the premises of the person furnishing, preparing, or serving such tangible personal property.
- The sale of all tangible personal property, except for:
Exceptions for Collecting Virginia Sales Tax:
Except for tangible services such as restaurant meals and short-term lodging, collection of state and local sales tax is not required for sales of services. Some common examples of non-taxable services include, but are not limited to:
- Professional, insurance, or personal service transactions that involve sales as inconsequential elements which are not charged separately;
- Services rendered by repair persons for which a separate charge is made;
- Services not involving an exchange of tangible personal property which provide access to or use of the Internet and any other related electronic communication service delivered electronically via the Internet;
- The amount separately charged for labor or services rendered in installing, applying, remodeling, or repairing tangible personal property sold; and
- Transportation charges separately stated.
[Note: For a complete list of Virginia exemptions, refer to Title 58.1, Chapter 6 of the Virginia Code. For information on exemptions in foreign states, contact Financial Reporting and Operations.]
- Reporting Sales Tax:
The department or activity head completes the electronic ST-9 sales tax worksheet and submits it to Financial Reporting and Operations on a monthly basis, even if there have been no sales for that month. The ST-9 must be submitted no later than the sixth day of the month following the month covered by the worksheet. A copy must be retained in the department, together with the purchaser sales tax exemption certificates, if any, relating to such sales.
Foreign State Sales:
The department or activity head must track and report any sales shipped into foreign states to Financial Reporting and Operations. Foreign state sales must be submitted no later than the sixth day of the month following the month of the sale. Financial Reporting and Operations will assist in identifying taxable sales in jurisdictions where the University has established economic nexus.
Any department failing to meet the monthly reporting deadline will be charged for any resulting late charges assessed to the University.
Remittance of Sales Tax Receipts:
Financial Reporting and Operations aggregates University sales tax receipts and electronically remits them to the appropriate tax authorities, including the Virginia Department of Taxation with full payment. The expense is charged to the respective departmental revenue accounts to recover the tax payments made on their behalf.
The department or activity head is responsible for:
- collecting sales tax when a sale in his/her area is subject to sales tax; and
- submitting to Financial Reporting and Operations no later than the sixth day of the following month:
- monthly Virginia sales data by completing the electronic sales tax worksheet; and
- monthly foreign state sales data as required by Financial Reporting and Operations.
Financial Reporting and Operations is responsible for:
- aggregating University sales tax receipts;
- remitting such receipts on a monthly basis to the appropriate state department of taxation; and
- charging the respective departmental revenue accounts to recover the tax amount paid on their behalf.
Compliance with Policy:
Failure to comply with the requirements of this policy may result in disciplinary action up to and including termination or expulsion in accordance with relevant University policies.
Questions about this policy should be directed to Financial Reporting and Operations.