Virginia Accelerated Sales Tax Policy Being Phased Out
- Dec 19, 2011 | Susan McLain
In order to help balance the budget more quickly, Virginia instituted an accelerated sales tax policy that required most retailers to pay 90% of their expected sales tax liability (based on last year’s totals) early in June for the June 2010 returns. According to Tax Analysts, “…lawmakers required retailers with more than $1 million in taxable sales to pay their sales taxes early in order to balance the commonwealth’s budget without raising taxes.”
This year, the Governor has expressed he will “…rapidly speed up elimination” of this policy starting with June 2012. In order to phase out the policy, the 2011 General Assembly raised the bar from retailers with $1 million in sales the prior year to only those who made $5.4 million or greater in the previous year. This eliminated over 7,000 of the retailers who would have been required to make the accelerated payment this year. It also decreased revenues by $45.7 million.
For June 2012, the Governor proposes a new threshold level of $26 million in sales and/or purchases in the previous year. According to the Governor’s press release, “This proposal is built into the Caboose Budget Bill and will exempt another 1,407 dealers from making accelerated sales tax payments next June. Fiscal year 2012 general fund revenues have been reduced by $50 million to account for this provision.”
Businesses with questions about the accelerated tax policy can check out the Frequently Asked Questions on the Virginia Department of Taxation site, or the guidelines provided in May of 2011.