Sales, Use and International Tax Articles

Sales, Use and International Tax Activity Update - June 2010

Virginia Stipends Bleeding Coffers with Accelerated Retail Sales Tax Payments

The Virginia Department of Taxation has issued guidelines and rules regarding the requirement for accelerated sales tax payments.

The Appropriations Acts for the 2008-10 and 2010-12 biennium require certain retail sales and use tax dealers and direct payment permit holders (Dealers) to make an additional payment in June of each year.

Beginning in 2010, any Dealer with taxable sales and/or purchases of $1 million or greater in the previous fiscal year must make a payment in June equal to 90% of the Dealer’s retail sales and use tax liability for the previous June. The accelerated sales tax payment will be due on June 25 for Dealers paying by mail and on June 30 for Dealers paying electronically. Affected Dealers will be entitled to take a credit for this amount on the return for June of the current year due July 20. To the extent that a Dealer is not able to claim the credit in its entirety on the July return, the department will issue the Dealer a refund.

This accelerated sales tax payment requirement will be phased out beginning in Fiscal Year 2013 with the payment amount for June 2013 being reduced to 85% of the sales and purchases for the previous June and that payment amount will continue to be reduced until fully eliminated not later than June 2021.

The department will notify all affected Dealers each year and provide them with payment instructions and a payment voucher for the additional payment on or about June 1 of each year. The Dealer will receive a separate voucher for each account and should separately reconcile each payment using the applicable reconciliation tax form. The department will also provide reconciliation tax forms to each Dealer to reconcile the Dealer’s actual tax liability for June against the accelerated payment. The Dealer will enter the amount of the accelerated sales tax payment as the Dealer’s Accelerated Tax Payment in order to subtract it from the Dealer’s June retail sales and use tax liability. The Dealer will be responsible for paying the difference and filing the reconciliation tax return on or before July 20. If the accelerated payment creates an overpayment for June, the Dealer will be able to claim a credit on the return for July due in August.

Ruling of Commissioner, P.D. 10-46, Virginia Department of Taxation, May 6, 2010.

The Ruling of Commissioner, P.D. 10-46 can be viewed on the Virginia Tax Policy Library Web site.

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