Storing Inventory in Virginia? Your Business Will Now Have Nexus

Nexus is defined as having a sufficient physical presence in a taxing jurisdiction. It is used to determine whether sellers are required to collect sales tax from purchasers and remit the tax to the jurisdiction. Nexus laws vary by state or local government.

Recently the General Assembly of Virginia amended and enacted § 58.1-612 of the Code of Virginia (H.B.2058). The Code defines the term “dealer” and is used to determine nexus in the state. The updated law determines businesses who “own tangible personal property that is for sale located in this Commonwealth or that is rented or leased to a consumer” now have sales tax nexus. In other words, storing inventory that will be for sale within the state creates nexus in Virginia.

One positive for out of state sellers in Virginia is they are an origin-based state. This means that sales tax is determined based on the seller’s location, not the ship to location. The current state sales tax rate in Virginia is 4.3%, but there are several different county, city, and district taxes within the state. The burden will be on the seller to research all warehouse locations to determine the correct tax rate to charge their Virginia customers. 

The new law takes effect July 1, 2017, so sellers have until then to register for a Virginia Sales Tax Permit and begin remitting tax.

Allyn Contributor:  Penny Ott

Tips for the Taxpayer

Stay up-to-date with state and local tax rates. In an audit, the taxpayer will be responsible for the correct tax rate. Stay current with your state, county, and city legislation. Look for planning opportunities and exemptions that might be applicable to your company.

For More Information

If you are interested in learning more about this topic or other tax topics, please visit our Tax Publications under News and Events at www.allynintl.com.

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Allyn’s tax team is staffed with seasoned tax professionals experienced in all aspects of Federal, multi-state and local tax compliance and consulting for large US and global corporations. We use that experience to your advantage.

Allyn files state and local sales and use tax returns in every US taxing jurisdiction. We can manage your tax compliance, create a solid tax process, and provide audit defense for your company.

Contact us and we can provide a customized cost-effective solution to meet your company’s needs. For further information on Allyn Tax services, please contact: tax@allynintl.com.

About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North America, Europe and Asia and Allyn regional headquarters are strategically located in Fort Myers FL USA, Shanghai P.R. CHINA and Prague, CZECH REPUBLIC. For more information, log on to www.allynintl.com.