Virginia Sales Tax Guide
Chapter 5: Filing and paying Virginia sales tax
You're registered with the Virginia Department of Taxation and you've begun collecting sales tax. Congratulations! Remember, those tax dollars don't belong to you. As an agent of the state of Virginia, your role is that of intermediary transferring tax dollars from consumers to state and local tax authorities. Let's take a deeper look at how filing Virginia sales tax returns impacts your business.What does it mean to file an Virginia sales tax return?
Technically speaking, filing Virginia sales tax returns is a two-step process comprised of submitting the required sales data and remitting the collected tax dollars (if any) to state and local tax authorities.
In most states, there are a number of options for submitting sales tax data to the state. Business owners may complete a Virginia sales tax filing form and mail it to the Virginia Department of Taxation or they can file electronically online. In all states, filing online is recommended.
The filing process forces the business owner to detail their total sales, the amount of sales tax they have collected, and from where. The Virginia Department of Taxation wants to be kept up to date on your business growth (or lack thereof) to make sure they are getting the tax dollars due. By completing ongoing filing of monthly, quarterly, or semi-annual, or annual Virginia sales tax returns, they stay abreast of your growing company.When am I required to file my sales tax return?
The Virginia Department of Taxation will assign you a filing frequency. Typically, this is determined by the size of your business. State governments typically ask larger businesses to file more frequently. Visit our Virginia filing due dates page for more information.Am I required to file and pay my Virginia sales tax at the same time?
Virginia sales tax returns must be filed and paid at the same time and are governed by the same due date.I want to webfile my Virginia sales tax. What are my options?
Avalara has built the TrustFile product to allow business owners a quick and easy way to prepare and webfile Virginia sales tax returns. Users can sign up and use the service to prepare Virginia returns free for 30-days.
Filers may also file directly with the Virginia Department of Taxation by visiting their site and entering your transaction data manually. This is a free service, but preparing Virginia sales tax (breaking it down by jurisdiction) can be time consuming - especially for larger sellers.Can a 3rd party file my sales tax on my behalf?
Yes! Many business owners recognize they are not a tax professional and therefore, choose to outsource their sales tax sales and use tax filing to services like Avalara TrustFile or to an accountant or bookkeeper. This is a normal business practice that can save business owners time and help them avoid costly mistakes due to inexperience and a lack of deep knowledge about Virginia sales tax code.What happens if I file or pay my sales tax return late?
Late Filing Penalty
Should you file your Virginia sales tax return more than six months after the due date and you owe tax, your return may be subject to a late filing penalty at a rate of 6% per month, or portion thereof, from the due date of the return until the return is filed. The minimum penalty assessed is $10 while the maximum penalty is capped at 30%*.
Note: Due to the six month delay before a late filing penalty is assessed in Virginia, the maximum penalty of 30% will be immediately applied.
Late Payment Penalty
If you do file your Virginia sales tax return within the six month window, but fail to pay your outstanding tax liability, you will be assessed the 6% per month penalty with the cap again set at 30%.
The Virginia Department of Taxation charges interest on any outstanding tax liability per the federal underpayment rate established under Internal Revenue Code Section 6621, plus 2%.Do I need to file a return if I didn't collect any sales tax in Virginia?
Yes! Once you've successfully registered for and been issued a Certificate of Registration, you are required to file at the completion of each assigned collection period regardless of whether any sales tax was collected. This is what is known as a "zero-tax filing".
Failure to submit a required zero-tax filing can result in penalties imposed on your business by the Virginia Department of Taxation so don't take this responsibility lightly.If I close my business, do I need to file a final sales tax return?
Yes! The Virginia Department of Taxation requires all businesses to "close their books" by filing a final sales tax return. This also holds true for business owners selling or otherwise transferring ownership of their business.Does the Virginia Department of Taxation offer a discount for filing on time?
Vendor discounts are rebates offered to tax filers by state tax jurisdictions to compensate filers for the effort involved with collecting, filing, and remitting sales tax in a timely manner. Such discounts are frequently cited as outdated by those who see them as a tax loophole for big businesses. With online buying and SaaS services like Avalara TrustFile, the days of managing receipts, balancing books, and writing checks to the state have long since been replaced by computer automation.
The Virginia Department of Taxation currently offers a vendor discount (also known as a dealer collection allowance) of 1.6% on the first $62,500 and 0.80% on any remaining tax revenue plus an additional 1.0% for local tax with a maximum of no maximum and a minimum of no minimum.