Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 210 - RETAIL SALES AND USE TAX › Section 23VAC10-210-6070 - Welfare assistance redeemable in goods

Current through Register Vol. 40, No. 24, July 15, 2024
A. Generally. Except as provided in
				subsection B of this section, the tax applies to tangible personal property
				purchased by individuals with welfare benefits.
B. Food stamps and WIC drafts. Effective
				October 1, 1986, the tax does not apply to tangible personal property purchased
				by individuals with food coupons ("food stamps") issued by the U.S. Department
				of Agriculture under the Food Stamp Program or drafts (WIC drafts) issued
				through the Virginia Special Supplemental Food Program for Women, Infants, and
				Children.
C. Other purchases by
				food stamp and WIC program participants. The exemptions set forth in subsection
				B of this section, apply only to food or other items of tangible personal
				property actually purchased with food stamps or WIC drafts. Thus, all other
				purchases by food stamp and WIC program participants that are not paid for with
				food stamps or WIC drafts are subject to the tax.
D. Dealer's returns. In computing the total
				exempt sales relating to goods paid for with food stamps and WIC drafts, a
				dealer may make an exact accounting of such sales or may choose one of the two
				following alternative methods:
ALTERNATIVE 1: A dealer may compute his exempt food stamp and
				  WIC sales by utilizing the monthly total of all food stamps deposited, plus the
				  total number of $1 food stamps retained at the end of the month, reduced by the
				  total amount of coinage given as change from food stamps during the month and
				  the total number of $1 food stamps on hand on the first day of the month. To
				  this total should be added the total amount of WIC drafts deposited during the
				  month.
Example: Tendered to Dealer A during the month are $10,000 in
				  food stamps on purchases of eligible foods. In addition, Dealer A had $40 in
				  food stamps on hand on the first day of the month. Dealer A returns $1,000 of
				  such stamps and $180 in coin to customers as change from food stamp purchases.
				  Thus, Dealer A has taken in a net total of $9,040 in food stamps for the month.
				  Of this total, Dealer A deposits with his bank during the month $8,990 and on
				  the last business day of the month withholds fifty food stamps of the $1
				  denomination in order to have sufficient change for the next business day. In
				  addition, Dealer A deposits WIC drafts totalling exempt purchases of $500
				  during the month. Dealer A would compute his total deduction from gross
				  receipts for exempt food stamp and WIC sales as follows:
Food stamps deposited during month
$8,990
Food stamps retained at end of month
50
Food stamps on hand at first of month
(40)
WIC drafts deposited during month
500
Coin change from food stamp purchases
(180)
Total deduction for exempt food stamp and
						  WIC sales
$9,320
ALTERNATIVE 2: The second option available to a dealer in
				  computing his exempt food stamp and WIC sales is to utilize the monthly total
				  of food stamps deposited, plus the total number of $1 food stamps retained at
				  the end of the month (reduced by the total amount of food stamps on hand on the
				  first day of the month), multiplied by 98%. To this total should then be added
				  the total amount of WIC drafts deposited during the month.
Dealers utilizing this approach may also seek authorization
				  from the department to use an alternative percentage to account for coin change
				  returned to customers from food stamps. Any such request must be accompanied by
				  a detailed analysis of not less than one month's food stamp
				  transactions.
Example: Tendered to Dealer B during the month are $10,000 in
				  food stamps. In addition, Dealer B had on hand $40 in food stamps on the first
				  day of the month. Returned to customers in change from such stamps are $1,000
				  in food stamps; thus, Dealer B has taken in a net total of $9,040 in food
				  stamps during the month. Of this total, Dealer B deposits $8,990 into his bank
				  account and retains $50 in food stamps on the last day of the month. In
				  addition, Dealer B deposits WIC drafts totalling $500 during the month. Dealer
				  B would compute his total deduction from gross receipts for exempt food stamp
				  and WIC sales as follows:
Food stamps deposited during month
$8,990
Food stamps retained at end of month
50
Food stamps on hand on first day of month
(40)
$9,000
x .98
$8,820
WIC drafts deposited during month
500
Total deduction for exempt food stamp and
						  WIC sales
$9,320
The total exempt food stamp and WIC sales arrived at under
				  either option would then be added to the total of other exempt sales and
				  deducted from gross receipts when the dealer files his monthly sales and use
				  tax return, Form ST-9. The option selected by the dealer for purposes of filing
				  his first return for taxable periods beginning on or after October 1, 1986,
				  must be followed for all subsequent returns, unless the dealer obtains written
				  authorization from the Tax Commissioner for the use of an alternative
				  method.
Statutory Authority
§§ 58.1-203 and 58.1-609.10(6) of the Code of
					 Virginia.