Virginia Administrative Code
Title 23 - TAXATION
Agency 10 - DEPARTMENT OF TAXATION
Chapter 210 - RETAIL SALES AND USE TAX
Section 23VAC10-210-485 - Dealer's compensation or discount
Current through Register Vol. 41, No. 3, September 23, 2024
A. Generally. As compensation for accounting for and paying the state tax, a dealer is allowed a discount of 0.8%, 1.2%, or 1.6%, depending on the volume of monthly taxable sales, of the first 3.0% of the state tax due in the form of a deduction, provided the amount due was not delinquent at the time of payment. No compensation is allowed on the remainder of the state sales tax or on the local tax. Dealers must compute the discount without regard to the number of certificates of registration that they hold (see subsection C of this section).
To compute the dealer's discount, a dealer (other than a vending machine dealer) would multiply the 4.3% state tax listed on his return by:
Any dealer whose average monthly sales tax liability exceeds $20,000 is not eligible for the discount. No dealer discount is allowed on the 0.7% regional tax imposed in the Hampton Roads and Northern Virginia Regions. For definitions of the "Hampton Roads Region" and the "Northern Virginia Region" see 23VAC10-210-2070.
Examples:
Dealer A who makes taxable sales of $10,000 during the month would report state and local tax of $530 ($430 state tax and $100 local tax), from which he would retain a dealer's discount of $4.80, provided that his return is timely filed and the state and local tax is timely paid. The $4.80 discount is computed by multiplying the 4.3% state tax ($430) by 0.01116 since the dealer's monthly taxable sales volume is less than $62,501.
Dealer B who makes taxable sales of $250,000 during the month would report state and local tax of $13,250 ($10,750 state tax and $2,500 local tax), from which he would retain a dealer's discount of $55.99 provided that his return is timely filed and the state and local tax is timely paid. The $55.99 discount is computed by multiplying the 4.3% state tax ($10,750) by 0.00558 since the dealer's monthly taxable sales volume is greater than $208,001.
B. Vending machine sales. In the case of a vending machine dealer who pays combined state and local tax at the rate of 6.3% on his wholesale purchases for resale, the dealer's discount would be computed by multiplying the 5.3% state tax listed on his return by:
Examples:
Vending machine dealer A with $15,000 in wholesale purchases for resale during the month would report state and local tax of $945 ($795 state tax and $150 local tax), from which he would retain a dealer's discount of $9.60, provided that his return is timely filed and the state and local tax is timely paid. The $9.60 discount is computed by multiplying the 5.3% state tax ($795) by 0.01208 since the dealer's monthly taxable sales volume is less than $62,501.
Vending machine dealer B with $200,000 in wholesale purchases for resale during the month would report state and local tax of $12,600 ($10,600 state tax and $2,000 local tax), from which he would retain a dealer's discount of $96.04, provided that his return is timely filed and the state and local tax is timely paid. The $96.04 discount is computed by multiplying the 5.3% state tax ($10,000) by 0.00906 since the dealer's monthly taxable sales volume is at least $62,501 but is less than $208,001.
C. Multiple registrations. Dealers holding two or more certificates of registration must compute the dealer's discount based upon taxable sales from all business locations. This requirement applies to dealers filing consolidated returns and those filing separate returns for each business location.
Example:
Dealer C holds separate certificates of registration for five business locations. Each location has monthly taxable sales of less than $62,501, but total taxable sales for all five locations are $300,000 for the month. Because total taxable sales exceed $208,001, the dealer's discount is computed using the 0.00558 discount rate.
Dealers with multistate business locations must compute the discount based upon taxable sales from all business locations in Virginia and on Virginia taxable sales from out-of-state business locations.
Example:
Dealer A, with business locations in Virginia, also has business locations in other states, all of which are registered for collection and remittance of the tax. The out-of-state business locations sell goods to Virginia customers located in Virginia. The total monthly taxable sales for all Dealer A's Virginia business locations are $200,000, and the total Virginia taxable sales from Dealer A's out-of-state business locations are $100,000. Because total taxable sales exceed $208,001, the dealer's discount is computed using the 0.00558 discount rate.
The department will perform a reconciliation, on an annual basis or more frequently, of dealers holding multiple certificates of registration in order to ensure that the dealer's discount is computed properly by those dealers.
D. Quarterly filers. Dealers filing quarterly returns may determine the appropriate dealer's discount rate by dividing their quarterly taxable sales by 3.
Example:
Dealer D has quarterly taxable sales of $100,000. His average monthly taxable sales for the quarter ($100,000 ÷ 3) are $33,333.33. Because his average monthly taxable sales are less than $62,501, Dealer D would compute the dealer's discount using the 0.01116 rate.
E. Refund requests. Any amount of tax refunded by the department to a dealer will be reduced by any dealer's discount claimed on the transaction to which the refund relates. For example, if a dealer sells an item for $1,000, timely files a return reporting the $53 tax on the transaction and claims the discount, the amount refunded would be $52.52 ($53 less 0.01116 of the $43 state tax = $50 - 0.48 = $52.52) (assuming the dealer's taxable sales during the month of the sale were less than $62,501).
For extensions, see 23VAC10-210-550; for penalties and interest, see 23VAC10-210-2030 through 23VAC10-210-2032.
Statutory Authority: § 58.1-203 of the Code of Virginia.
