Current through Register Vol. 41, No. 3, September 23, 2024
A. Generally. The watercraft sales and use
tax is to be paid by the purchaser or user of watercraft and is to be collected
by the Tax Commissioner at the time the owner is required to apply for a title
for the watercraft.
1. If a watercraft
originally acquired for tax exempt use and titled without payment of tax is
subsequently utilized for nonexempt purposes, it then becomes subject to the
tax based on the lower of its cost or current market value.
2. If no title is required on a watercraft,
then the watercraft sales and use tax will not be levied on the watercraft
unless the owner chooses to apply for a title with the Department of Game and
Inland Fisheries.
Unless a watercraft is exempt from the Watercraft Sales and
Use Tax, title may not be issued unless the applicant shows to the satisfaction
of the Department of Game and Inland Fisheries that the tax has been
paid.
B. Payment
and collection of tax. The tax may be paid to the Department of Taxation or to
the Department of Game and Inland Fisheries except in cases where no title
change is involved. In such cases, tax payment must be made directly to the
Department of Taxation. See the department's website,
www.tax.virginia.gov, for more
information about payment and forms.
C. Dealer collection. The Tax Commissioner
may also enter into agreements with registered dealers allowing them to collect
the tax from their customers. If a registered dealer desires to collect the
2.0% Watercraft Sales and Use Tax on all his taxable transfers of watercraft,
he may do so by signing an agreement with the Tax Commissioner. In agreeing
with the Tax Commissioner to collect the 2.0% tax on transfers of watercraft,
the dealer must agree to abide by the following regulations:
1. Collection of tax by dealers from their
customers.
a. Generally. The tax must be paid
to the Commonwealth by the dealer, but the dealer must separately state on the
invoice the amount of the tax and add the tax to the sales price or charge.
Thereafter, the tax is a debt from the purchaser, consumer or lessee to the
dealer until paid and is recoverable at law in the same manner as other
debts.
b. Advertising absorption of
tax prohibited. A dealer may not advertise or hold out to the public in any
manner, directly or indirectly, that he will absorb all or any part of the
Watercraft Sales and Use Tax, or that he will relieve the purchaser, consumer
or lessee of the payment of all or any part of the tax.
c. Erroneous collection on nontaxable
transactions. Any dealer collecting the Watercraft Sales and Use Tax on
nontaxable transactions must transmit to the Department of Taxation such
erroneously or illegally collected tax unless he can show that the tax has been
refunded to the purchaser or credited to the purchaser's account.
2. Dealers' monthly returns and
payment of tax.
a. Generally. Every dealer
authorized by execution of "Dealer Agreement" to collect Watercraft Sales Tax
is required to file a return on or before the twentieth day of the month
following each reporting period even if no tax has been collected. Returns are
prescribed and furnished by the Department of Taxation.
b. Payment to accompany dealer's return. At
the time of filing the return, the dealer must pay the full amount of tax
collected or invoiced to purchasers. Failure to pay the tax will cause it to
become delinquent.
c. Penalties. A
dealer who fails to file a return and pay the full amount of tax by the due
date is subject by "Dealer Agreement" to a penalty of 6.0% of the amount due
for each month or portion thereof that the failure continues, not to exceed
30%. The penalty may be waived by the Tax Commissioner if there is good cause
for the failure to file and/or pay on time. Request for waiver of penalty must
be made in writing to the Department of Taxation and must include all pertinent
facts to support the request.
d.
Interest. Interest at a rate determined in accordance with § 58.1-15 of
the Code of Virginia will by "Dealer Agreement" accrue on the unpaid amount of
the tax from the due date until the time of payment. Interest will accrue
whether or not any penalty is waived.
3. Extension not allowed. No extension will
be allowed for filing and/or paying the tax due for the month.
4. Dealer compensation not allowed. A dealer
will not be allowed any deduction from the amount of the 2.0% Watercraft Sales
and Use Tax due on his return to compensate him for accounting for and paying
the tax.
5. See
23VAC10-230-40 B for information
on payment of the tax for a boat motor.
