SALES TAX TUESDAY 2018: Virginia

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How could we be anywhere other than Virginia for this Memorial Day week’s Sales Tax Tuesday, and specifically in Arlington at our nation’s cemetery, Arlington National Cemetery.  We are here within this vast 624-acre estate to honor the dead from our nation’s conflicts who have been interred here since the Civil War.

As far as the eye can see, row upon row of small white tombstones each marked with a small American flag to honor their commitment to our nation.  This is one place you won’t pay any sales tax because these hallowed grounds are home to more than 400,000 active duty military and veterans who ‘paid it all’ for the freedom we enjoy.

Each year more than 3,000 funeral services, interment ceremonies and memorial services take place here under the auspices of ‘The Old Guard’ comprised of soldiers of the Army’s 3rd U.S. Infantry Regiment who also stand watch 24-hours a day, 365-days per year at the Cemetery’s ‘Tomb of the Unknowns’.

Just across the Potomac river from Washington, D.C., this is a place of sharp contrast from the politics of our nation’s capital, for this is truly a place of dignity, respect, remembrance and honor. 

I typically try to show you one of the most beautiful places in each state we visit on our Sales Tax travelogue, along with the most historic and interesting.  Arlington National fits all three of those criteria, it is indeed one place that you will never forget once you have visited there.

We will take a moment away from our travels to thanks Avalara, the 'tax people', for helping us with this article and this 50 (plus) part series, covering sales tax issues associated with each and every state tax jurisdiction in the United States. Insightful Accountant is publishing 'Sales Tax Tuesday 2018' every Tuesday to give you updated information as well as another look at some of the key information from our 2015 series. We also will be publishing a number of 'special editions' when things change during the course of the year for one or more states, or sales tax topics in general.  Accordingly we have been 'off tour' the last few weeks dealing with a lot of special features, so we are happy to be back 'on point' this week, and as I said what better place can we be than in Virginia.

The rest of Virginia is just as full of history as Arlington National. You might guess as much when the state has the nickname of ‘Old Dominion’ due to its status as the first English colonial possession in North America.  It is also known as the ‘Mother of Presidents’ because eight of our U.S. Presidents have been born in Virginia. 

Virginia, like many New England states refers to itself as a ‘Commonwealth’ and while you might think that Arlington with its proximity to Washington, D.D. might be the capital the seat of power resides in Richmond .

This stately white Capitol Building is home to the oldest elected legislative body in our Country, the Virginia General Assembly first established as the House of Burgesses in 1619.  That was just a few years after Jamestown was established on the banks of the James River.

But Richmond wasn’t always Virginia’s capital, in fact Williamsburg had that honor from 1699 through 1780.  It is still noted for its history and culture.

Virginia is the home of George Washington and Thomas Jefferson along with several other founding fathers. It played a key role in the American Revolution and during the Civil War, Richmond served as the capital of the Confederate states. 

Did you know that more than half of all the battles fought during our Civil War took place within the boundaries of Virginia? Throughout the four years of that war Confederate armies used the Blue Ridge Mountains which make up the East side of the Shenandoah Valley, within what is today Shenandoah National Park, to conceal the movement of troops. Leading these efforts was none other than Thomas ‘Stonewall’ Jackson who apparently knew the area better than anyone thus giving him a strategic advantage when confronting Union forces attempting to advance south along the valley’s floor.

Looking for something less majestic and historic, and with a little more ‘romance’, then how about Virginia Beach; after all, as the tourism slogan puts it, “Virginia is for Lovers.”

Virginia’s Beaches are not just about the beach, as in the case of the City of Virginia Beach. You will find the Virginia Aquarium and Marine Center there, Cape Henry Lighthouses, Ocean Breeze Waterpark, the Virginia Beach Boardwalk and a spectacular retail, dining and entertainment district called ‘Town Center’.  But unlike the historic and majestic sites, you will be paying State and Local Sales taxes for all of these ventures.

Speaking of sales tax, did you know that sales tax represents the number on revenue source for many state governments, and is clearly the vast majority of revenue for many local governments?  Sales taxes are about a diverse as political viewpoints. Some states tax personal property sold excluding groceries, other states tax everything sold except services, some states tax some services and other states tax most services. 

With states enacting ‘economic Nexus’ left and right, you never know if you’re going to need to collect sales or use tax on an out-of-state sale, or if you can treat your customer as ‘tax exempt.’  And because states are also changing their sales tax provisions to make them stronger and more revenue-centric to bolster their budgets, you could have a ½-cent increase in sales tax due on this side of the street, and a ¾-cent increase on the other side of the street. 

Just keeping up with all the changing provisions related to sales and use tax is almost a full-time job, problem is, you already have a full-time job, running your business.  You didn’t open your business to do ‘sales tax’ stuff, you started your business to meet the needs of your customers.  That’s why you need an expert like Avalara when it comes to keeping you ‘tuned-in’ to sales tax changes impacting you and your customers, no matter where they are.

But there is still more for us to see in Virginia, so let’s get back to our little RV trip, I am kind of a history nut, especially when it comes to our country’s history through the rebuilding from the Civil War. So, we are going to take in a few more historic sites that everyone should see once in their lifetime. The first on our stop is just southeast of Arlington near Alexandria, I’m talking about Mount Vernon the plantation house of our first President, George Washington. 

The estate is also home to the Washington family tomb where Washington is interred. Many people wrongfully believe that the Washington Monument in Washington D.C. is his burial location.

Another great American Statesman, Thomas Jefferson has a grand estate he called Monticello, located just outside Charlottesville. It, like Washington’s Mount Vernon are both operate by foundations (trusts), rather than the National Park Service. As such you will pay not only admission, but sales taxes on those tickets whether for day to day walking tours, or special events.

We have a couple of other sites to see, the first is Fort Norfolk which was authorized by President Washington in 1794 to oversee the Elizabeth River and help protect Norfolk during the War of 1812.  During the Civil War Confederate forces seized the fort to aid in their defense of Norfolk and Portsmouth.  The fort is still part of the U.S. Army Corps of Engineers facilities even today.

But today when most people hear the name of Norfolk in connection with the military it isn’t the nearly 300-year-old Fort they think of, it’s the pride of the Navy, the Naval Station Norfolk and its companion facility the Norfolk Naval Shipyard that serves as home and maintenance facility for our Atlantic fleet.

Combined, the two facilities comprise the largest shipyard in the world.  Naval Station Norfolk is in the Sewells Point area of the City of Norfolk, near the site of the historic battle of the Monitor and Merrimac. The facility also supports U.S. Naval forces in the Mediterranean Sea and Indian Ocean as well as the Atlantic fleet.

Well that about wraps up our tour of Virginia with an emphasis on the state’s historical significance.  But as I said earlier, Sales Tax plays an important role in every state’s revenues, and Virginia is no exception.  So, let’s take a look at some sales tax facts:

Sales Tax Facts

  • Virginia’s state sales tax rate is 4.3%. Depending on local municipalities, the tax rate can be as high at 6%.
  • Virginia imposes sales tax on the retail sale or lease of tangible personal property. Several services are also subject to sales and use tax. Virginia also taxes the use or consumption of tangible personal property.
  • Virginia is one of the few origin sourcing states. This means that sales tax is based on the location of the seller, not the buyer. Virginia is a not a member of Streamlined Sales Tax (SST)
  • Virginia now has a single sales tax holiday, the state allows one three-day holiday the first weekend in August where three categories of qualifying items (energy-efficiency products, school supplies, and hurricane preparedness items) can be purchased without paying sales tax.
  • Bundlers beware! Tax officials took a hard line with one Virginia software seller who mixed it up on his invoices. The provider assumed it was exempt from collecting sales tax on products delivered to customers electronically. But, because the customer also received a tangible version of the software and services connected with the product, the entire transaction was subject to sales and use tax according to local laws.

Manual sales and use taxes are prone to error and can consume hours of your time in collection, accounting and reporting for what is pass-through paperwork rather than revenue-generating activities.

Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity so you won't spend time digging yourself out from under sales tax burdens or audits.