Sales and Use Taxes in West Virginia

April 13, 2006

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In West Virginia the sales tax is referred to as the general consumers sales and service tax. The West Virginia tax is imposed on the privilege of selling tangible personal property or rendering certain selected services. Most services are taxable except for the furnishing of professional or personal services.

Sales and use tax rate. The West Virginia sales and use tax rates are 6 percent. (In addition, make sure you contact your local governments in West Virginia because they are allowed to assess a local sales and use tax.)

Effective January 1, 2006, the sales and use tax on the sale, purchase and use of food and food ingredients intended for human consumption is reduced from 6 to 5 percent. However, the lower rate does not apply to prepared food, food sold in a heated state, or food sold with eating utensils provided by the seller.

Tax-exempt items. West Virginia has many specific items that are exempt from sales tax — for example, certain prescription medications are exempt from West Virginia sales tax. You'll want to check and see if you are exempt from the sales tax.

Responsibility for paying sales tax. In West Virginia the state imposes upon vendors the duty to collect sales tax from purchasers and to pay the collected tax to the Tax Commissioner.

Use tax. The use tax is an excise tax levied and imposed on the use in West Virginia of tangible personal property and taxable services. The sales tax and the use tax are intended to be complementary.

Responsibility for collecting use tax. In West Virginia the use tax that is not collected by the retailer must be paid to the Tax Commissioner directly by the purchasers using the property in West Virginia.

Obtaining tax permits in West Virginia. West Virginia does not specifically address whether vendors need to be registered for collecting sales tax. However, any person engaging in a business activity in West Virginia must obtain a business registration certificate from the Tax Commissioner.

Leases. In West Virginia the definition of sale includes leases and rentals. The transfer of the possession or ownership of tangible personal property for a consideration is defined as a lease or rental. So leasing, renting, and licensing to use tangible personal property are subject to sales and use tax. An operating lease is treated as a lease, while a financing lease is treated as a sale for purposes of the sales and use tax. An operating lease gives the lessee use of the leased property for a certain period, while the lessor retains all or most of the risk and rewards of ownership. A financing lease transfers title of the leased property to the lessee at the end of the lease or gives the lessee the option to purchase the property at a nominal price. Consumers sales tax is imposed on the total amount of each lease payment.

The following discussions address additional sales and use tax issues that many small business owners face: