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Sales tax 101
Sales tax is a tax paid to a governing body (state or local) on the sale of certain goods and services. West Virginia first adopted a general state sales tax in 1933, and since that time, the rate has risen to 6%. On top of the state sales tax, there may be one or more local sales taxes, as well as one or more special district taxes, each of which can range between 0% and 1%. Currently, combined sales tax rates in West Virginia range from 6% to 7%, depending on the location of the sale.
As a business owner selling taxable goods or services, you act as an agent of the state of West Virginia by collecting tax from purchasers and passing it along to the appropriate tax authority. Sales and use tax in West Virginia is administered by the West Virginia State Tax Department (Tax Department).
Any sales tax collected from customers belongs to the state of West Virginia, not you. It’s your responsibility to manage the taxes you collect to remain in compliance with state and local laws. Failure to do so can lead to penalties and interest charges.
When you need to collect West Virginia sales tax
In West Virginia, sales tax is levied on the sale of tangible goods and some services. The tax is collected by the seller and remitted to state tax authorities. The seller acts as a de facto collector.
To help you determine whether you need to collect sales tax in West Virginia, start by answering these three questions:
- Do you have nexus in West Virginia?
- Are you selling taxable goods or services to West Virginia residents?
- Are your buyers required to pay sales tax?
If the answer to all three questions is yes, you’re required to register with the state tax authority, collect the correct amount of sales tax per sale, file returns, and remit to the state.
Failure to collect West Virginia sales tax
If you meet the criteria for collecting sales tax and choose not to, you’ll be held responsible for the tax due, plus applicable penalties and interest.
It’s extremely important to set up tax collection at the point of sale — it’s near impossible to collect sales tax from customers after a transaction is complete.
Sales tax nexus
The need to collect sales tax in West Virginia is predicated on having a significant connection with the state. This is a concept known as nexus. Nexus is a Latin word that means "to bind or tie," and it’s the deciding factor for whether the state has the legal authority to require your business to collect, file, and remit sales tax.
Sales tax nexus in all states used to be limited to physical presence: A state could require a business to register and collect and remit sales tax only if it had a physical presence in the state, such as employees or an office, retail store, or warehouse.
In June 2018, the Supreme Court of the United States overruled the physical presence rule with its decision in South Dakota v. Wayfair, Inc. States are now free to tax businesses based on their economic and virtual connections to the state, or economic nexus.
While physical presence still triggers a sales tax collection obligation in West Virginia, it’s now possible for out-of-state sellers to have sales tax nexus with West Virginia.
Out-of-state sellers with no physical presence in a state may establish sales tax nexus in the following ways:
Affiliate nexus: Having ties to businesses or affiliates in West Virginia. This includes, but isn’t limited to, the design and development of tangible personal property (goods) sold by the remote retailer, or solicitation of sales of goods on behalf of the retailer.
Click-through nexus:Having an agreement to reward a person(s) in the state for directly or indirectly referring potential purchasers of goods through an internet link, website, or otherwise. At this time, West Virginia has not enacted a click-through nexus law.
Economic nexus: Having a certain amount of economic activity in the state. For sales made on and after January 1, 2019, a remote seller must register with the state then collect and remit West Virginia sales tax if the remote seller meets either of the following criteria (the economic thresholds) in the state:
- More than $100,000 in gross sales of tangible personal property and services during the current or previous calendar year; or
- At least 200 transactions
Inventory in the state: Storing property for sale in the state. This includes merchandise owned by Fulfillment by Amazon (FBA) merchants and stored in West Virginia in a warehouse owned or operated by Amazon.
Marketplace sales: Making sales through a marketplace. Effective July 1, 2019, marketplace facilitators with more than $100,000 in gross sales or at least 200 transactions in the state during the current or preceding calendar year are responsible for collecting and remitting sales tax on behalf of marketplace sellers in West Virginia.
Trade shows: Attending conventions or trade shows in West Virginia. You may be liable for collecting and remitting West Virginia use tax on orders taken or sales made during West Virginia conventions or trade shows.
If you have sales tax nexus in West Virginia, you’re required to register with the Tax Department and to charge, collect, and remit the appropriate tax to the state.
Sales tax nexus can linger even after a retailer ceases the activities that caused it to be “engaged in business” in the state. This is known as trailing nexus. As of December 2019, West Virginia does not have an explicitly defined trailing nexus policy.
Fulfillment by Amazon (FBA)
If you’re an active Amazon seller and you use Fulfillment by Amazon (FBA), you need to know where your inventory is stored and if its presence in a state will trigger nexus. FBA sellers can also download an Inventory Event Detail Report from Amazon Seller Central to identify inventory stored in West Virginia.
If you sell taxable goods to West Virginia residents and have inventory stored in the state, you likely have nexus and an obligation to collect and remit tax. To begin to understand your unique nexus obligations, check out our free economic nexus tool or consult with a trusted tax advisor.
Sourcing sales tax in West Virginia: which rate to collect
In some states, sales tax rates, rules, and regulations are based on the location of the seller and the origin of the sale (origin-based sourcing). In others, sales tax is based on the location of the buyer and the destination of the sale (destination-based sourcing).
West Virginia is a destination-based state. This means you’re responsible for applying the sales tax rate determined by the ship-to address on all taxable sales.
After determining you have sales tax nexus in West Virginia, you need to register with the proper state authority and collect, file, and remit sales tax to the state. We get a lot of questions about this and recognize it may be the most difficult hurdle for businesses to overcome. Avalara Licensing can help you obtain your West Virginia business license and sales tax registration.
How to register for a West Virginia seller's permit
You can register for a West Virginia seller’s permit online through the Tax Department. To apply, you’ll need to provide the Tax Department with certain information about your business, including but not limited to:
- Business name, address, and contact information
- Federal EIN number
- Date business activities began or will begin
- Projected monthly sales
- Projected monthly taxable sales
- Products to be sold
Cost of registering for a West Virginia seller's permit
The cost to register as a business in West Virginia is $30. However, transient vendors must post a security (bond, cash, certified check, or irrevocable letter of credit) in the amount of $500.
Acquiring a registered business
You must register with the West Virginia State Tax Department if you acquire an existing business in West Virginia. The state requires all registered businesses to have the current business owner’s name and contact information on file.
Streamlined Sales Tax (SST)
The Streamlined Sales and Use Tax Agreement (SSUTA), or Streamlined Sales Tax (SST), is an effort by multiple states to simplify the administration and cost of sales and use tax for remote sellers. Remote sellers can register in multiple states at the same time through the Streamlined Sales Tax Registration System (SSTRS).
West Virginia became a full member of the SST on October 1, 2005.
Collecting sales tax
Once you've successfully registered to collect West Virginia sales tax, you'll need to apply the correct rate to all taxable sales, remit sales tax, file timely returns with the West Virginia State Tax Department, and keep excellent records. Here’s what you need to know to keep everything organized and in check.
How you collect West Virginia sales tax is influenced by how you sell your goods:
Brick-and-mortar store: Have a physical store? Brick-and-mortar point-of-sale solutions allow users to set the sales tax rate associated with the store location. New tax groups can then be created to allow for specific product tax rules.
Hosted store: Hosted store solutions like Shopify and Squarespace offer integrated sales tax rate determination and collection. Hosted stores offer sellers a dashboard environment where West Virginia sales tax collection can be managed.
Marketplace: Marketplaces like Amazon and Etsy offer integrated sales tax rate determination and collection, usually for a fee. As with hosted stores, you can set things up from your seller dashboard and let your marketplace provider do most of the heavy lifting.
Mobile point of sale: Mobile point-of-sale systems like Square rely on GPS to determine sale location. The appropriate tax rate is then determined and applied to the order. Specific tax rules can be set within the system to allow for specific product tax rules.
West Virginia sales tax collection can be automated to make your life much easier. Avalara AvaTax seamlessly integrates with the business systems you already use to deliver sales and use tax calculations in real time.
Some goods are exempt from sales tax under West Virginia law. Examples include most textbooks, prescription drugs, and medical supplies.
We recommend businesses review the laws and rules put forth by the West Virginia State Tax Department to stay up to date on which goods are taxable and which are exempt, and under what conditions.
Some customers are exempt from paying sales tax under West Virginia law. Examples include government agencies, some nonprofit organizations, and merchants purchasing goods for resale.
Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction.
Misplacing a sales tax exemption/resale certificate
West Virginia sales tax exemption and resale certificates are worth far more than the paper they’re written on. If you’re audited and cannot validate an exempt transaction, the West Virginia State Tax Department may hold you responsible for the uncollected sales tax. In some cases, late fees and interest will be applied and can result in large, unexpected bills.
Sales tax holidays
Sales tax holidays exempt specific products from sales and use tax for a limited period, usually a weekend or a week. Approximately 17 states offer sales tax holidays every year.
As of December 2019, however, there are no sales tax holidays in West Virginia.
Filing and remittance
You're registered with the West Virginia State Tax Department and you've begun collecting sales tax. Remember, those tax dollars don't belong to you. As an agent of the state of West Virginia, your role is that of intermediary to transfer tax dollars from consumers to the tax authorities.
How to file
Once you’ve collected sales tax, you’re required to remit it to the West Virginia State Tax Department by a certain date. The West Virginia State Tax Department will then distribute it appropriately.
Filing a West Virginia sales tax return is a two-step process comprised of submitting the required sales data (filing a return) and remitting the collected tax dollars (if any) to the Tax Department. The filing process forces you to detail your total sales in the state, the amount of sales tax collected, and the location of each sale.
Online filing is generally recommended, but form CST-200CU is available for download and acceptable. However, businesses with more than $25,000 in sales tax liability during the previous year are required to file electronically.
The West Virginia State Tax Department will assign you a filing frequency. Typically, this is determined by the size or sales volume of your business. State governments generally ask larger businesses to file more frequently. See the filing due dates section for more information.
West Virginia sales tax returns and payments must be remitted at the same time; both have the same due date.
You may file directly with the Tax Department by visiting their site and entering your transaction data manually. This is a free service, but preparing West Virginia sales tax returns can be time-consuming — especially for larger sellers.
Using a third party to file returns
To save time and avoid costly errors, many businesses outsource their sales and use tax filing to an accountant, bookkeeper, or sales tax automation company like Avalara. This is a normal business practice that can save business owners time and help them steer clear of costly mistakes due to inexperience and a lack of deep knowledge about West Virginia sales tax code.
Avalara Returns for Small Business is an affordable third-party solution that helps business owners simplify the sales tax returns process and stay focused on growing their business.Learn how automating the sales tax returns process could help your business.
Filing when there are no sales
Once you have a West Virginia seller's permit, you’re required to file returns at the completion of each assigned collection period regardless of whether any sales tax was collected. When no sales tax was collected, you must file a "zero return.”
Failure to submit a zero return can result in penalties and interest charges.
Closing a business
The Tax Department requires all businesses to "close their books" by filing a final sales tax return. This also holds true for business owners selling or otherwise transferring ownership of their business.
Timely filing discount
Many states encourage the timely or early filing of sales and use tax returns with a timely filing discount. As of December 2019, the Tax Department does not offer sales tax filers a discount.
Filing due dates
It's important to know the due dates associated with the filing frequency assigned to your business by the West Virginia State Tax Department. This way you'll be prepared and can plan accordingly. Failure to file by the assigned date can lead to late fines and interest charges.
The Tax Department requires all sales tax filing to be completed by the 20th day of the month following the tax period. Below, we've grouped West Virginia sales tax filing due dates by filing frequency for your convenience. Due dates falling on a weekend or holiday are adjusted to the following business day.
West Virginia 2020 monthly filing due dates
February 20, 2020
March 20, 2020
April 20, 2020
May 20, 2020
June 22, 2020
July 20, 2020
August 20, 2020
September 21, 2020
October 20, 2020
November 20, 2020
December 21, 2020
January 20, 2021
West Virginia 2020 quarterly filing due dates
Q1 (January 1–March 31)
April 20, 2020
Q2 (April 1–June 30)
July 20, 2020
Q3 (July 1–September 30)
October 20, 2020
Q4 (October 1–December 31)
January 20, 2021
West Virginia 2020 annual filing due date
January 1–December 31
January 20, 2021
Filing a West Virginia sales tax return late may result in a late filing penalty as well as interest on any outstanding tax due. For more information, refer to our section on penalties and interest.
In the event a West Virginia sales tax filing deadline was missed due to circumstances beyond your control (e.g., weather, accident), the Tax Department may grant you an extension. However, you may be asked to provide evidence supporting your claim.
Penalties and interest
Hopefully you don't need to worry about this section because you're filing and remitting West Virginia sales tax on time and without incident. However, in the real world, mistakes happen.
If you miss a sales tax filing deadline, follow the saying, “better late than never,” and file your return as soon as possible. Failure to file returns and remit collected tax on time may result in penalties and interest charges, and the longer you wait to file, the greater the penalty and the greater the interest.
If you’re in the process of acquiring a business, it’s strongly recommended that you contact the Tax Department and inquire about the current status of the potential acquisition. Once you've purchased the business, you’ll be held responsible for all outstanding West Virginia sales and use tax liability.
Shipping and handling
If you’re collecting sales tax from West Virginia residents, you’ll need to consider how to handle taxes on shipping and handling charges.
Taxable and exempt shipping charges
West Virginia sales tax may apply to charges for shipping, handling, delivery, freight, and postage.
Separately stated shipping charges are generally taxable unless provided by a common carrier (and the customer pays the delivery charge directly to the common carrier). When charges for shipping, handling, delivery, freight, and postage are included in the sale price, they’re generally taxable if the sale is taxable and exempt if the sale is exempt.
There are exceptions to almost every rule with sales tax, and the same is true for shipping and handling charges. Specific questions on shipping in West Virginia and sales tax should be taken directly to a tax professional familiar with West Virginia tax laws.
For additional information, see West Virginia Administrative Notice 09-20.