Virginia Regulatory Town Hall

Final Text

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Action:
Amendment of the Retail Sales and Use Tax Regulation Sections ...
Stage: Final
 

23VAC10-210-6041. Vending machine sales; dealers engaged in the business of placing vending machines.

A. Registration requirements. Except as otherwise authorized by the Tax Commissioner, every person engaged in the business of placing vending machines and selling tangible personal property through such machines shall apply for a Certificate of Registration for each county and city in which machines are placed. A separate registration is required for each place of business from which nonvending machine sales are made. Dealers holding or applying for multiple vending or nonvending registrations may request permission at the time of application to file consolidated vending or nonvending returns.

B. Computation of tax. All items of tangible personal property sold through vending machines by those vending machines dealers engaged in placing vending machines and selling tangible personal property through such machines are taxable at the rate of 5.5% 6.0% (4.5% 5.0% state and 1.0% local).

Any dealers, all of whose machines are under contract to nonprofit organizations, should refer to 23VAC10-210-6042. Dealers acquiring items from other suppliers and selling them in the same condition which they were acquired shall compute the 5.5% 6.0% tax on the cost price of the purchased tangible personal property. Dealers who manufacture the tangible personal property to be sold through vending machines shall compute the 5.5% 6.0% tax on the cost of the manufactured tangible personal property (cost of goods manufactured). The cost of manufactured personal property includes raw material cost plus labor and overhead attributable to the manufacture of the item being sold.

Example:

Dealer A purchases (or manufactures) items, with a total cost price of $1,000, during the month for sale through vending machines. Dealer A would compute the tax as follows:

Total cost price ($1,000) X State tax rate (.045 .05) = State tax ($45 $50)

Total cost price ($1,000) X Local tax rate (.01) = Local tax ($10)

TOTAL TAX =$55 $60

The method of accounting used for federal income tax purposes shall be the accounting method used in determining the cost price of purchased tangible personal property and the cost of manufactured tangible personal property. For example, if the first-in, first-out method of accounting is used for federal income tax purposes, this accounting method shall be used each month for computing the cost price of purchased tangible personal property or the cost of manufactured tangible personal property.

As an alternative method of computing the tax, any dealer unable to maintain satisfactory records to determine the cost price of purchased tangible personal property and the cost of manufactured tangible personal property may request in writing to the Tax Commissioner authority to remit an amount based on a percentage of gross receipts which takes into account the inclusion of the 4.5% 5.0% sales tax.

Example:

Dealer B, who has been authorized by the Tax Commissioner to compute the tax based on gross receipts, had gross receipts from vending machine sales during the month of $3,000. Dealer B would compute the tax as follows:

Gross receipts ($3,000) X State tax rate (.035 .04) = State tax ($105 $120)

Gross receipts ($3,000) X Local tax rate (.01) = Local tax ($30)

TOTAL TAX = $135 $150

Upon receiving such authorization from the Tax Commissioner, a return Form ST-9 shall be filed to report the 4.5% 5.0% sales tax beginning with the period set out in the authorization letter. All subsequent returns shall be filed using this method unless the dealer applies in writing to the Tax Commissioner and is given authorization in writing to change his filing status. Authorization to compute the tax using this alternative method will not eliminate the requirement to maintain records which show the location of each vending machine, purchases and inventories of merchandise bought for sale through vending machines, and total gross receipts for each vending machine.

C. Filing of returns. Except as otherwise authorized by the Tax Commissioner, dealers engaging in the business of placing vending machines and selling tangible personal property through such machines must file a Form VM-2 to report the tax on the items sold through vending machines.

Returns are due by the 20th day of the month following the period in which tangible personal property is sold through vending machines, with the tax to be computed in the manner set out in subsection B above. A return is required to be filed for each locality where vending machines are located unless a dealer has requested and been granted authority to file a consolidated return.

Nonvending machine sales shall not be reported on Form VM-2 but shall be reported on Form ST-9, Dealer''s Retail Sales and Use Tax Return.

D. Purchases. Tangible personal property purchased for resale through vending machines may be purchased under Certificate of Exemption, Form ST-10. All tangible property purchased for use or consumption by the dealer and not for resale, including vending machines and repair parts for such machines, and withdrawals of tangible personal property from a tax exempt manufacturing or resale inventory for use or consumption by the dealer are subject to the tax at the rate of 4.5% 5.0% of the cost price of the property. If the supplier does not charge the tax on purchases for use or consumption, the vending machine dealer shall pay the tax directly to the Department of Taxation on Form ST-9, Dealer''s Retail Sales and Use Tax Return (if he is registered for nonvending sales) or Form ST-7, Consumer''s Use Tax Return. Tax on purchases for the vending machine dealer''s own use or consumption shall not be reported on Form VM-2. Dealers who manufacture or process tangible personal property for sale may be entitled to the industrial exemption for tangible personal property used directly in manufacturing or processing as set forth in §58.1-609.3(2) of the Code of Virginia and 23VAC10-210-320 23VAC10-210-920.

E. Records. Records shall be kept for a period of three years and shall show the location of each machine; purchases and inventories of merchandise bought for sales through vending machines; and the cost price of purchased tangible personal property or the cost of manufactured tangible personal property for each machine.

Statutory Authority

§§58.1-203 and 58.1-614 of the Code of Virginia.

Historical Notes

Derived from VR630-10-110 §2; revised July 1, 1969; January 1, 1979; January 1, 1985; December 1, 1986; May 1, 1988; amended, eff. May 15, 1988.

23VAC10-210-6042. Vending machine sales; dealers under contract with nonprofit organizations.

A. Registration requirements. A separate Certificate of Registration (application Form R-1) is required for each county and city in which vending machines are placed. Dealers holding multiple registrations may request permission to file a consolidated return at the time of application.

B. Computation of tax. Dealers engaged in the business of placing vending machines all of which are under contract to nonprofit organizations may deduct sales of $.10 or less from gross receipts and divide the remaining balance by 1.045 1.05 to determine the amount of taxable sales upon which the 4.5% 5.0% tax is due and payable. To qualify for this method of computing the tax, all machines of the vending machine dealer must be under contract to nonprofit organizations.

C. Filing of returns. Form ST-9, Dealer''s Retail Sales and Use Tax Return, is required to be filed for each locality in which vending machines are placed by the 20th day of the month to report the 4.5% 5.0% tax on (i) sales made in the previous period and (ii) untaxed purchases for use or consumption by the dealer or withdrawals from tax exempt inventory for use or consumption by the dealer.

D. Records. A contract shall be kept for each vending machine under contract to nonprofit organizations. Additionally, records shall be kept for a period of four years to show the location of each vending machine, purchases and inventories of merchandise bought for sale, and total gross receipts for each vending machine separating items sold for $.10 or less from items sold for more than $.10.

Statutory Authority

§§58.1-203 and 58.1-614 of the Code of Virginia.

Historical Notes

Derived from VR630-10-110 §3; revised July 1, 1969; January 1, 1979; January 1, 1985; December 1, 1986; May 1, 1988; amended, eff. May 15, 1988.

23VAC10-210-6043. Vending machine sales; other dealers selling tangible personal property through vending machines.

Dealers not engaged in the business of placing vending machines but who use vending machines at their places of business to sell merchandise, e.g., service station operators, must report the tax at the rate of 4.5% 5.0% of gross taxable sales on the same return on which nonvending machine sales are reported (Form ST-9, Dealer''s Retail Sales and Use Tax Return).

Statutory Authority

§§58.1-203 and 58.1-614 of the Code of Virginia.

Historical Notes

Derived from VR630-10-110 §4; revised July 1, 1969; January 1, 1979; January 1, 1985; December 1, 1986; May 1, 1988; amended, eff. May 15, 1988.