Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 210 - RETAIL SALES AND USE TAX › Section 23VAC10-210-6041 - Vending machine sales; dealers engaged in the business of placing vending machines

Current through Register Vol. 40, No. 24, July 15, 2024
A.
				Registration requirements. Except as otherwise authorized by the Tax
				Commissioner, every person engaged in the business of placing vending machines
				and selling tangible personal property through such machines shall apply for a
				Certificate of Registration for each county and city in which machines are
				placed. A separate registration is required for each place of business from
				which nonvending machine sales are made. Dealers holding or applying for
				multiple vending or nonvending registrations may request permission at the time
				of application to file consolidated vending or nonvending returns.
B. Computation of tax. All items of tangible
				personal property sold through vending machines by those vending machines
				dealers engaged in placing vending machines and selling tangible personal
				property through such machines are taxable at the rate of 6.3% (5.3% state and
				1.0% local) and 7.0% (5.3% state, 0.7% regional, and 1.0% local) in the Hampton
				Roads and Northern Virginia Regions. For definitions of the "Hampton Roads
				Region" and the "Northern Virginia Region" see
				23VAC10-210-2070.
Any dealers, all of whose machines are under contract to
				  nonprofit organizations, should refer to
				  23VAC10-210-6042. Dealers
				  acquiring items from other suppliers and selling them in the same condition
				  which they were acquired shall compute the 6.3% (7.0% in the Hampton Roads and
				  Northern Virginia Regions) tax on the cost price of the purchased tangible
				  personal property. Dealers who manufacture the tangible personal property to be
				  sold through vending machines shall compute the tax on the cost of the
				  manufactured tangible personal property (cost of goods manufactured). The cost
				  of manufactured personal property includes raw material cost plus labor and
				  overhead attributable to the manufacture of the item being sold.
Example:
Dealer A purchases (or manufactures) items, with a total cost
				  price of $1,000, during the month for sale through vending machines. Dealer A
				  would compute the tax as follows:
Total cost price ($1,000) X State tax rate (.053) = State tax
				  ($53)
Total cost price ($1,000) X Local tax rate (.01) = Local tax
				  ($10)
TOTAL TAX = $63
The method of accounting used for federal income tax purposes
				  shall be the accounting method used in determining the cost price of purchased
				  tangible personal property and the cost of manufactured tangible personal
				  property. For example, if the first-in, first-out method of accounting is used
				  for federal income tax purposes, this accounting method shall be used each
				  month for computing the cost price of purchased tangible personal property or
				  the cost of manufactured tangible personal property.
As an alternative method of computing the tax, any dealer
				  unable to maintain satisfactory records to determine the cost price of
				  purchased tangible personal property and the cost of manufactured tangible
				  personal property may request in writing to the Tax Commissioner authority to
				  remit an amount based on a percentage of gross receipts which takes into
				  account the inclusion of the 5.3% (6.0% in the Hampton Roads and Northern
				  Virginia Regions) sales tax.
Example:
Dealer B, who has been authorized by the Tax Commissioner to
				  compute the tax based on gross receipts, had gross receipts from vending
				  machine sales during the month of $3,000. Dealer B would compute the tax as
				  follows:
Gross receipts ($3,000) X State tax rate (.043) = State tax
				  ($129)
Gross receipts ($3,000) X Local tax rate (.01) = Local tax
				  ($30)
TOTAL TAX = $159
Upon receiving such authorization from the Tax Commissioner,
				  a return shall be filed to report the 5.3% (6.0% in the Hampton Roads and
				  Northern Virginia Regions) sales tax beginning with the period set out in the
				  authorization letter. All subsequent returns shall be filed using this method
				  unless the dealer applies in writing to the Tax Commissioner and is given
				  authorization in writing to change his filing status. Authorization to compute
				  the tax using this alternative method will not eliminate the requirement to
				  maintain records which show the location of each vending machine, purchases and
				  inventories of merchandise bought for sale through vending machines, and total
				  gross receipts for each vending machine.
C. Filing of returns. Except as otherwise
				authorized by the Tax Commissioner, dealers engaging in the business of placing
				vending machines and selling tangible personal property through such machines
				must file a return to report the tax on the items sold through vending
				machines.
Returns are due by the 20th day of the month following the
				  period in which tangible personal property is sold through vending machines,
				  with the tax to be computed in the manner set out in subsection B of this
				  section. A return is required to be filed for each locality where vending
				  machines are located unless a dealer has requested and been granted authority
				  to file a consolidated return.
D. Purchases. Tangible personal property
				purchased for resale through vending machines may be purchased under
				Certificate of Exemption, Form ST-10. All tangible property purchased for use
				or consumption by the dealer and not for resale, including vending machines and
				repair parts for such machines, and withdrawals of tangible personal property
				from a tax exempt manufacturing or resale inventory for use or consumption by
				the dealer are subject to the tax at the rate of 5.3% (6.0% in the Hampton
				Roads and Northern Virginia Regions) of the cost price of the property. If the
				supplier does not charge the tax on purchases for use or consumption, the
				vending machine dealer shall pay the tax directly to the Department of Taxation
				on the Retail Sales and Use Tax Return (if he is registered for nonvending
				sales) or on the Consumer's Use Tax Return. Dealers who manufacture or process
				tangible personal property for sale may be entitled to the industrial exemption
				for tangible personal property used directly in manufacturing or processing as
				set forth in subdivision 2 of § 58.1-609.3 of the Code of Virginia and
				23VAC10-210-920.
E. Records. Records shall be kept for a
				period of three years and shall show the location of each machine; purchases
				and inventories of merchandise bought for sales through vending machines; and
				the cost price of purchased tangible personal property or the cost of
				manufactured tangible personal property for each machine.
Statutory Authority: § 58.1-203 of the Code of
					 Virginia.