- Virginia Retail Sales and Use Tax Overview
- University Exemption from Virginia Sales Tax
- Sales Tax in States Other than Virginia
- Virginia Sales Tax Charged by the University
- Federal Excise Taxes
Virginia Retail Sales and Use Tax Overview
Virginia sales and use tax applies broadly to the sale, lease or rental of tangible personal property in Virginia. See Va. Code §58.1-600 et seq. However, sales tax generally does not apply to services, although there are certain exceptions:
- Combined Property and Services: Where service and tangible personal property are combined in a product, Virginia applies the “true object” test and the end user will be taxed on the entire product. See 23 VAC §10-210-4040. For instance, if a piece of equipment is fabricated for delivery to a purchaser, the “true object” of the transaction is the sale and delivery of the equipment and thus the entire cost of the equipment, including any services involved in the fabrication, will be subject to sales tax.
- Lodging: The provision of rooms, lodgings or accommodations furnished for less than 90 continuous days by any hotel, motel, inn, tourist camp or cabin, camping grounds, club, etc. See 23 VAC §10-210-730.
- Meals: Any services provided in connection with the furnishing, preparing, or serving meals. See 23 VAC §10-210-930.
The seller is responsible for collecting sales tax from the purchaser on each taxable sale. The tax must be separately stated on the invoice. The general sales tax rate for Virginia is 5.3 percent (4.3 percent state tax and 1 percent local tax).
University Exemption from Virginia Sales Tax
The University is generally exempt from paying Virginia sales tax as both a governmental entity and a nonprofit with just a couple exceptions, discussed below. Note that University policy requires the department or business unit to claim any available sales tax exemptions.
- Tangible Goods: Purchases of tangible personal property for use or consumption by agencies of the Commonwealth such as the University are exempt from sales tax. The University department making the purchase should provide the vendor with a governmental exemption certificate, Form ST-12. See Va. Code §58.1-609.1.
Services: As noted above, services are generally exempt from tax except for purchases of meals and lodging which are considered “taxable services” in Virginia.
- Lodging: The University is required to pay Virginia sales tax on lodging; there are no available exemptions.
Meals: For many years, the Virginia Department of Taxation provided no exemption from meals tax that was applicable to University activities. However, effective April 22, 2016, the Department of Taxation changed its policy regarding the application of sales tax to purchases of restaurant and catered meals by nonprofit and governmental entities. Pursuant to Tax Bulletin 16-3, meals are exempt if: (i) the meal furthers the mission of the governmental or nonprofit entity; (ii) the meal is paid for directly by the governmental or nonprofit entity (that is, by a check from the University rather than from an individual reimbursed by the University); and (iii) the governmental or nonprofit entity determines the place, time and recipients of the meal.
Bottom Line: Meals purchased by University employees during business travel or while entertaining University guests remain subject to Virginia sales tax. However, restaurant and catered meals purchased for purposes of departmental or University events, programs, and meetings are no longer subject to sales tax.
Sales Tax in States Other than Virginia
State sales tax laws vary widely, from not charging sales tax on any purchases, to requiring registration and proof of exemption, to affording no exemptions whatsoever to out-of-state entities. This office maintains a state sales tax database of the University’s exemption status in all fifty states and the District of Columbia.
Many state exemptions only cover the state sales tax and not local meals or lodging taxes. Many states also require proof of exemption in some fashion, such as production of an exemption certificate. It's recommended that travellers refer to the state sales tax database in advance of travel to determine whether an exemption exists and, if so, what actions need to be taken.
Virginia Sales Tax Charged by the University
While the University is exempt from sales taxes in most cases, it is not exempt from charging sales tax. The University is obligated to charge and remit state sales tax to the same extent as any other commercial seller when engaging in the sale of tangible goods and taxable services. This office has developed a number of resources for units that conduct sales:
- FIN-032: Collecting, Reporting, and Remitting Virginia Sales Tax.
- For general instructions on when sales tax applies, see “Retail Sales and Use Tax Instructions for University of Virginia Departments and Units Engaged in Taxable Sales."
- Form ST-9A, the Virginia Retail Sales and Use Tax Worksheet.
- University of Virginia ST-9A Worksheet Instructions.
Questions regarding the ST-9A worksheet and sales tax remission process generally should be directed to the University’s State Accountant, June Ward Seay, in Accounting Services at 434-924-4207 or email@example.com.
Federal Excise Taxes
The University is exempt from some, but not all, federal excise taxes. For more information, please contact this office or see IRS Publication 510: Excise Taxes.