Should you collect sales tax in West Virginia?
Sales tax is levied on selling goods and services to your customers, including leasing or renting tangible property. However, you will collect the sales tax if you determine the nexus in West Virginia. Nexus is the presence that may come physically or economically.
In West Virginia, if your company has a store, warehouse, or office, you have established a physical nexus. When threshold restrictions (as the state has already established) are reached, the economic nexus is created. These limits may be determined by transaction volume or revenue.
Let’s explore if your business has a Physical nexus in West Virginia.
A physical nexus is integrated when your business is engaged in the following in West Virginia:
- Servicing tangible personal property in West Virginia.
- Maintaining, occupying, or using a place of business or an office in West Virginia.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- Leasing or owning any tangible personal property in a state.
- Having a stock of goods in West Virginia.
Is it constituting an Economic nexus in West Virginia?
If you are a remote seller (i.e., do not have a physical presence in the state) and your business sales in West Virginia exceeded $100,000 in the previous or current calendar year, or if you make 200 or more separate retail transactions or deliveries into the state, you are required to register and abide by sales tax regulations.
You may also refer to the West Virginia tax division advisory to know more about activities that may create a business nexus within the state.
How can you Register for Sales tax in West Virginia?
By visiting the West Virginia website, you must apply online to get the sales tax permit. Alternatively, you can submit the licensing application by filing the BUS-APP with the Tax Commissioner.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- EIN and Social Security numbers of all officers, partners, or owners.
- Address details (physical and mailing).
- Business incorporation dates in West Virginia.
- Contact information.
- Estimated total monthly sales.
- NAICS Code.
- Nature of business.
Is your product or services liable for sales tax in West Virginia?
Tangible Property: Sales tax in West Virginia is imposed on the sale of goods and services, e.g., furniture, giftware, toys, etc.
Services: Many services are subject to sales tax in West Virginia, such as service or labor costs leading to the creation of tangible personal property, employee services, personal services, etc. For more information, click here.
Digital Product: Digital goods are subject to sales tax in West Virginia. Therefore, if you offer digital goods like software, streaming services, e-books, etc., you must collect sales tax. Here is what West Virginia says about digital transactions.
SAAS: Software as a service (SaaS) enables consumers to use cloud services over an internet connection. Since it’s a digital product in West Virginia, it’s taxed there. Review the West Virginia Revenue Department advisory.
It is important to remember that unless they are specifically excluded, all goods and services are subject to state taxes. The state has granted some exemptions from the sales tax collection, including food intended for domestic consumption, prescription medications, industrial equipment, etc. Please click here to see what exemptions are covered.
How should you collect and calculate state taxes in West Virginia?
Accurately computing and collecting the sales tax may involve stratospheric efforts, especially when you are not in West Virgina as the sales tax is destination-based in West Virgina which means you must collect taxes on tangible property sold to buyers based in West Virgina.
Complexities involved where you have a business nexus even if not in the state. Any default could lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden and you can focus on other important business aspects.
West Virginia has a base sales tax rate of 6%, followed by the local tax rates, which can increase to 1%. You may visit the sales tax rates page to know the sales tax rates of each city or county.
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectible = Sale value * (6% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
Shipping costs may be included in the selling price of the goods sold or specified separately on the sale invoice sent to the buyer. If the invoice includes separate shipping charges, there won’t be any tax implications. You must, however, collect the tax on the entire sales price, including delivery costs, if they are not specified separately. Here is the link for official guidance issued by the state for delivery charges.
How should you file sales tax in West Virginia?
E-file: You can e-file your return using the West Virginia MyTaxes portal.
Other e-filing or payment methods: Here are the complete details.
Please note that you must file and pay electronically if your tax collection is $50,000 or more.
Filing frequencies and due dates
Based on your reported sales tax or estimated taxable sales, the West Virginia Department of Revenue assigns you a filing frequency, which can be Monthly, Quarterly, or Annual. According to your filing frequency, the due date for filing sales tax would be the 20th day of the month following the relevant reporting period.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. This link will take you to the official West Virginia government advisory, where you can see what the state says about sales tax filing.
Are there any fines or penalties for default in filing or paying sales tax?
The state levies a penalty of 10% of sales tax due per month and an interest of 0.5% for late tax payments. The maximum penalty imposed will be 25% of the tax due.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Please review the West Virginia Revenue Department guidelines for penalties and interest.
Sales tax holiday in West Virginia
The West Virginia sales tax holiday applies to Clothing, School Supplies, Sports Equipment, etc. The sales tax holiday would start from 2nd August (12:01 a.m.) to 4th August (11:59 p.m.) for 2024. For detailed information, refer to the West Virginia Revenue Department advisory here.