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Virginia: Exemption Certificates Must Be Current, On File

  • Sep 26, 2013 | Gail Cole

In states with a sales tax, such as Virginia, all purchasers are required to pay sales tax on taxable transactions unless they provide the seller with a valid exemption certificate. An exemption certificate certifies that the holder of the certificate is exempt from paying sales tax. The exemption may be due to the buyer's non-profit status, or to the fact that the buyer will resell the purchased item.

A letter ruling issued last summer by the Virginia Department of Taxation reminds that sellers must collect valid exemption certificates from all applicable customers. It points to the following relevant Virginia law:

"All sales or leases are subject to the tax until the contrary is established. The burden of proving that a sale, distribution, lease or storage of tangible personal property is not taxable is upon the dealer unless he takes from the taxpayer a certificate to the effect that the property is exempt under this chapter." (Virginia Code § 58.1-623 A) (Emphasis mine).

Furthermore, under Title 23 of the Virginia Administrative Code 10-210-280 A:

All sales, leases and rentals of tangible personal property are subject to the tax until the contrary is established. The burden of proving that the tax does not apply rests with the dealer unless he takes, in good faith from the purchaser or lessee, a certificate of exemption indicating that the property is exempt under the law. The certificate will remain in effect except upon notice from the Department of Taxation that it is no longer acceptable. However, a certificate that is incomplete, invalid, infirm or inconsistent on its face is never acceptable, either before or after notice.

Managing customer exemption certificates is time consuming; errors can lead to costly audit findings. Move your customers' certificate to the cloud and leave your worries behind.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.