Virginia ~ Sales and Use Tax: Senate Agrees to Substitute Bill to Require Tax Collection for Online Retailers With In-State Distribution Facilities

The Virginia Senate has agreed to a substitute bill passed by the House of Delegates that would create a presumption that a dealer has sufficient activity within Virginia to require it to register for the collection of retail sales and use taxes if any commonly controlled person maintains a distribution center, warehouse, fulfillment center, office, or similar location within Virginia that facilitates the delivery of tangible personal property sold by the dealer to its customers. The presumption would be able to be rebutted by demonstrating that the activities conducted by the commonly controlled person in Virginia are not significantly associated with the dealer’s ability to establish or maintain a market in Virginia for the dealer’s sales.

The provisions of the bill would be effective on the earlier of September 1, 2013, or the effective date of federal legislation authorizing the states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the location of the seller. If, however, such federal legislation is enacted prior to August 15, 2013, and the effective date of that federal legislation is after September 1, 2013, but on or before January 1, 2014, then the provisions of the bill would become effective on January 1, 2014.

The original bill, which the Senate passed on February 10, 2012, would have created a presumption requiring online companies with distribution facilities, warehouses, fulfillment centers, or other related entities in the state to begin collecting sales taxes immediately. (TAXDAY, 2012/02/14, S.24) However, Gov. Bob McDonnell announced an agreement with legislative leaders, Amazon, and other stakeholders to give online retailers a temporary reprieve until September 1, 2013, before requiring them to collect taxes. This agreement, in the form of a substitute bill, was passed by the House of Delegates on February 27, 2012. (TAXDAY, 2012/02/29, S.19)

S.B. 597, as agreed to by the Virginia Senate on February 29, 2012


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