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Sales Tax Obligations of Sellers in West Virginia

April 13, 2006

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West Virginia imposes various requirements on sellers doing business in the state. We recommend that you go through the items below to help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. State Form WV/CST-280, Exemption Certificate, is used for a valid resale exemption. You are relieved from liability if a false, expired, canceled, or ineffective certificate is accepted from a purchaser, unless the resale certificate in not accepted in good faith. The exemption certificate must include the following information:

• the signature of the purchaser
• the purchaser's address
• a description of the reason for the exemption

Procedure for accepting blanket certificates. As a seller you may accept a blanket certificate if your customer repeatedly purchases the same type of property or service for processing or resale. However, blanket certificates may not be used to purchase property or service not covered by a blanket certificate. Resale certificates must be renewed annually during the vendor's taxable year. You are relieved from liability if a false, expired, canceled, or ineffective certificate is accepted from the purchaser, unless the certificate was not accepted in good faith.

Sales and use tax liability for out-of-state mail order and catalogue retailers. West Virginia has a statute that specifically taxes out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have physical presence within West Virginia. To determine if you have physical presence, ask yourself the following:

• Do I have retail facilities, a warehouse, or any office space in West Virginia? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
• Do my employees or I enter West Virginia for purposes of taking and transmitting orders from West Virginia? If your employee or independent contractor goes into West Virginia to take or transmit orders, your business may have physical presence in West Virginia. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
• Do my delivery vehicles frequently enter West Virginia for purposes of delivering property? Frequent deliveries in West Virginia by your trucks will give you physical presence in West Virginia.

Sales tax "rounding system." Beginning January 1, 2004, West Virginia changed from a bracket system to a rounding system for computing sales and use taxes. Sales tax is computed to the third decimal place and rounded up to the next whole cent when the third decimal place is greater than four, and rounded down to the lower whole cent when the third decimal place is four or less. Any tax due on a transaction may be computed either on a per item basis or on an invoice basis as long as the same method is used consistently during the reporting period.

The following table illustrates how the 6 percent state tax is computed on each dollar and/or fraction of a dollar:

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In West Virginia it is against the law to refund or offer to refund all or any part of the amount collected, or to absorb the amount of sales tax required to be added to the sales price and collected from the purchaser. As a seller, it is also against the law for you to advertise directly or indirectly that you will absorb the sales tax that is required to be added to the sales price.

Claiming refund for excess tax payments. In West Virginia any credit or refund given to your customers for returned goods may be deducted from the gross proceeds on your sales tax report. West Virginia does not allow any deductions for worthless accounts. You may file a sales tax credit claim within one year from the date of payment. Sales and use tax overpayments may be credited against the quarterly or monthly remittance of sales and use tax due, and any overpayments remaining may be credited against certain other taxes.

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