Get Ready! Virginia Sales and Use Tax Changes Moderator: Clare Dunn Office of Customer Services Presenter: Lee Mikelson Director, Business & Analytic Services Division

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House Bill 2313 Effective July 1, % increase Statewide 0.7 % increase Northern Virginia and Hampton Roads 3

Retail Sales and Use Tax General State Sales & Use Tax Rate4.3% Local State Sales & Use Tax Rate1.0% Total5.3% Vending Machine Sales and Use Tax General State Sales & Use Tax Rate5.3% Local State Sales & Use Tax Rate1.0% Total6.3% Retail Qualifying Food Sales State Qualifying Food Sales Tax Rate1.5% Local State Sales & Use Tax Rate1.0% Total2.5 Total2.5% Statewide Increase 0.3% Regional Increase 0.7% NO CHANGE State Qualifying Food Sales Tax Rate1.5% Local State Sales & Use Tax Rate1.0% Northern VA and Hampton Roads Regions Total Tax 2.5% General State Sales & Use Tax Rate4.3% Local State Sales & Use Tax Rate1.0% Regional Sales & Use Tax Rate.7% Northern VA and Hampton Roads Regions Total Tax6.0% General State Sales & Use Tax Rate5.3% Local State Sales & Use Tax Rate1.0% Regional Sales & Use Tax Rate.7% Northern VA and Hampton Roads Regions Total Tax 7.0% 4

Chesapeake City Isle of Wight County Poquoson City Surry County* Franklin City James City County Portsmouth City Virginia Beach City Gloucester County * Newport News City Southampton County Williamsburg City Hampton City Norfolk City Suffolk City York County New Regional Sales & Use Tax Alexandria City Fairfax County Manassas City Arlington County Falls Church City Manassas Park City Fairfax City Loudoun County Prince William County Northern Virginia Region Hampton Roads Region 5 * Counties not subject to the regional retail sales and use tax as originally presented in the webinar. While both counties are members of the Planning District 23 Commission that is impacted by the additional tax, neither county is located within the planning district. See Virginia Tax Bulletin VTB 13-8.

Revised Forms Form ST-9 for in-state sales Form ST-8 for out-of-state use Form ST-7 for business consumer use Form VM-2 for vending machine sales Form ST-6 for direct payment permits 6

7 Sourcing What is a locality? What does sourcing mean? What is an in-state sale? What is an out-of-state sale?

8 What is a Locality ? Cities are independent of counties 133 cities and counties as of July 1, 2013 Cities + Counties = Localities Each locality has a unique FIPS code Only cities and counties may impose local sales and use tax

9 What does sourcing mean? Every sale must be assigned, or sourced, to a Virginia locality. The 1% local sales and use tax is distributed to the sourced locality. Sourcing depends on: In-state sale or Out-of-state sale

10 What is an in-state sale? The seller/dealer has physical presence in Virginia, and The purchaser is located in Virginia In-state Sales Sourcing Rule Source to the locality in which your business is located. If located in the Northern Virginia or Hampton Roads regions, charge the additional regional tax. If NOT located in the Northern Virginia or Hampton Roads regions, do not charge the additional regional tax.

11 What is an out-of-state sale? The dealer either has no physical presence in Virginia, or The dealer has physical presence in Virginia but has sales originating outside of Virginia The purchaser is located in Virginia Out-of-state Sales Sourcing Rule Source to the locality where the item is being delivered. If delivering in the Northern Virginia or Hampton Roads regions, charge the additional regional tax. If NOT delivering in the Northern Virginia or Hampton Roads regions, do not charge the additional regional tax.

Sourcing 101 In-state Dealers ST-9 Filers Tax rate is determined by the dealer’s business location (point of sale) FORM TYPEAPPLICATION OF TAX RATE Out-of-State ST-8 Filers Tax rate is determined by the dealer’s destination where the item is shipped (point of delivery) #1 #2 12

13 Use our FIPS Code Lookup Tool to determine: Where your business location is, or The locality of an address you are mailing to Let’s take a look at the tool!

14 Remember – details and examples are provided in the HB 2313 Guidelines

Reporting Requirements Single-Locality Filer Consolidated Filer Non-Fixed Filer 93% 2% 5% 15 Form ST-8 Out-of-State Dealers Form ST-9 In-state Dealers

Transitional Rules 16

Contracts – General Rule Before April 3, 2013 – Delivered September 30, 2013 Entitled to Request Refund 17

Bona Fide Real Estate Construction Contracts Contract entered into before April 3, 2013 Must have finished plans and specifications 18

19 Tangible Personal Property (installment sales/layaway purchase) Before April 3, 2013 – Redeemed by September 30, 2013 Entitled to Request Refund

20 Leases Lease/rental agreement entered into before April 3, 2013 Leased property must be delivered to lessee by September 30, 2013

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22 Final Questions

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