WHICH GOODS AND SERVICES ARE TAXABLE?
Determining whether or not the products or services your company sells are taxable in West Virginia is the first step in sales tax compliance.
Traditional Goods or Services
Goods that are subject to sales tax in West Virginia include physical property, like furniture, home appliances, and motor vehicles.
The purchase of prescription medicine, groceries and gasoline are tax-exempt.
Digital Goods or Services
A digital good or service is anything electronically delivered, such as an album downloaded from iTunes or a film purchased from Amazon.
West Virginia does not require businesses to collect sales tax on the sale of digital goods or services.
However, West Virginia has one exception to this policy. Businesses must collect sales tax on pre-written computer software that is sold online.
HOW TO REGISTER FOR WEST VIRGINIA SALES TAX
If you determined that you need to charge sales tax on some or all of the goods and services your business sells, your next step is to register for a seller's permit. This allows your business to collect sales tax on behalf of your local and state governments.
In order to register, you will need the following information:
- Personal identification info (SSN, address, etc.)
- Business identification info (EIN, address, etc.) – Always use your home business or business address, even if you are located outside West Virginia
- NAICS code
- Date you began doing business in West Virginia (Not sure what to enter here? Read more about “When to Register for a Sales Tax Permit“)
Save Money with a Resale Certificate
With a resale certificate, also known as a reseller's permit, your business does not have to pay sales tax when purchasing goods for resale.
COLLECTING SALES TAX
After getting your seller's permit and launching your business, you will need to determine how much sales tax you need to charge different customers. To avoid fines and the risk of costly audits, it's important for business owners to collect the correct rate of sales tax.
When calculating sales tax, you'll need to consider the following kinds of sales:
- Store Sales
- Shipping In-State
- Out-of-State Sales
For traditional business owners selling goods or services on site, calculating sales tax is easy: all sales are taxed at the rate based on the location of the store.
Here's an example of what this scenario looks like:
Mary owns and manages a bookstore in Morgantown, West Virginia. Since books are taxable in the state of West Virginia, Mary charges her customers a flat-rate sales tax of 6.000% on all sales. This includes West Virginia’s state sales tax rate of 6.000%.
The state of West Virginia follows what is known as a destination-based sales tax policy. This means that long-distance sales within West Virginia are taxed according to the address of the buyer. This policy applies to state, county, and city sales taxes.
Consider the following example:
Steve runs his own business selling electronics on eBay out of his home in Beckley, West Virginia. A customer living in Charleston finds Steve’s eBay page and purchases a $350 pair of headphones. When calculating the sales tax for this purchase, Steve applies the 6.000% state tax rate for West Virginia, plus 1.000% for Charleston’s city tax rate. At a total sales tax rate of 7.000, the total cost is $374.50 ($24.50 sales tax).
West Virginia businesses only need to pay sales tax on out-of-state sales if they have nexus in other states. Nexus means that the business has a physical presence in another state.
Common types of nexus include:
- A physical location, such as an office, store, or warehouse
- An employee who works remotely or who is a traveling sales representative
- A marketing affiliate
- Drop-shipping from a third party seller.
- A temporary physical location, including festival and fair booths.
FILE YOUR SALES TAX RETURN
Now that you’ve registered for your West Virginia seller's permit and know how to charge the right amount of sales tax to all of your customers, you are all set to file your sales tax return. Just be sure to keep up with all filing deadlines to avoid penalties and fines.
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How to File
West Virginia requires businesses to file sales tax returns and submit sales tax payments online.
How Often Should You File?
How often you need to file depends upon the total amount of sales tax your business collects.
- Annual filing: If your business collects less than $600.00 in sales tax per year then your business should file returns on an annual basis.
- Quarterly filing: If your business collects no more than $250.00 in sales tax per month, then your business should file returns on a quarterly basis.
- Monthly filing: If your business collects more than $250.00 in sales tax per month,then your business should file returns on a monthly basis.
Note: West Virginia requires you to file a sales tax return even if you have no sales tax to report.
All West Virginia sales tax return deadlines fall on the 20th day of the month, unless it is a weekend or federal holiday, in which case the deadline is moved back to the next business day.
Annual filing: January 22, 2020
- Q1 (Jan. - Mar.): Due April 20
- Q2 (April - June): Due July 20
- Q3 (July - Sept.): Due October 20
- Q4 (Oct. - Dec.): Due January 22
Monthly filing: The 20th of the following month, or the next business day, e.g. April 20 for the month of March, or May 22 for the month of April.
Penalties for Late Filing
West Virginia charges a late filing penalty of 5.0% per month or partial month up to a maximum of 25.00% of the tax that is reported on the tax return.
West Virginia also charges a late payment penalty that is equal to 0.5% per month up to 25% of the tax that is unpaid.