Virginia Sales Tax Guide
Chapter 8: Understanding Virginia sales tax rules for shipping & handling
Sales tax issues are confusing enough for most ecommerce business owners, but the state of Virginia makes knowing when to charge sales tax on shipping and delivery charges particularly perplexing.
If your business in located in the state, or if you have a physical presence that gives you nexus, here’s what you should know about charging sales tax on shipping and delivery charges in the Virginia.
Is Shipping Taxable in Virginia?
According to the Virginia Department of Taxation, if shipping charges are separately stated on an invoice, sellers should not charge tax on them. But the state does require sellers to charge sales tax on “handling” charges, even if they are separately stated on the invoice. So if you sell a product and charge for shipping and handling, you will be required to charge sales tax on the entire fee.
Delivery Methods Don’t Matter
As long as you state the shipping or delivery charge separately in the invoice, you will not be required to charge the customer sales tax, no matter how you deliver the product to your customer. The Virginia tax law states that even postage used for delivery is not subject to sales tax.
What About Tax-Exempt Products?
According to a representative from the Virginia Department of Taxation, the same rules apply even when shipping tax-exempt items.
“It doesn’t matter if the delivery charge is for taxable or exempt items,” she said. “If you add a handling charge, the delivery fee is taxable on whatever you’re shipping.” Likewise, if you word the charge as “delivery” or “shipping,” it is not subject to sales tax.
Local Rules Follow the State Rules
The representative says that state and local rules are the same for shipping and delivery charges, so as long as sellers stay in compliance with state rules, they will be following all of the local rules.
Finally, the representative said the most important thing to remember is that once a seller adds the word “handling” to a delivery charge, all the rules change and that fee is then taxable. The key is to leave off the word, and you won’t have to worry about charging sales tax on shipping or delivery fees.