Which Virginia dealer discounts were reduced or suspended beginning with returns filed in mid-2010?

Subject

2010 dealer-discount reductions and suspensions

Plain-English summary

Virginia reduced or suspended multiple dealer discounts beginning with returns filed in mid-2010. The changes came from House Bills 29 and 30 and applied on different dates depending on the tax or filing frequency.

For retail sales and use tax, dealers required to pay by electronic funds transfer lost the discount beginning with the June 2010 return due July 20. The bulletin tied mandatory EFT to average monthly liability above $20,000. Dealers who paid electronically by choice were not covered by that suspension.

Other monthly sales-tax dealers kept reduced tiered discounts: 1.6% for monthly taxable sales below $62,501; 1.2% from $62,501 to below $208,001; and 0.8% from $208,001 upward. The bulletin supplied separate calculation factors for general sales, qualifying food, vending-machine sales, and the Digital Media Fee. Quarterly reductions began with the quarter starting July 1, 2010, due October 20; seasonal filers changed with June or their first return after June 30.

The dealer discount ended for the Tire Recycling Fee beginning with the July 1 quarter, and for the Communications Sales and Use Tax, landline E-911 tax, and Tobacco Products Tax beginning with the June 2010 return. The legislation did not change cigarette-stamping compensation, Motor Vehicle Fuel Sales Tax or Virginia Fuels Taxes discounts, or the five-percent prepaid wireless E-911 discount scheduled for 2011.

What this means for you

• This is a historical 2010 rate and filing guide; verify current rules.
• Mandatory-EFT status, not voluntary electronic payment, controlled the sales-tax discount suspension described here.
• Filing frequency and tax type determined the effective return.
• The bulletin's detailed tables remain the source for the historical discount factors.

Common questions

What was the mandatory-EFT threshold described?

Average monthly retail sales and use tax liability exceeding $20,000.

What reduced percentage tiers applied to other dealers?

1.6%, 1.2%, and 0.8%, based on monthly taxable sales brackets.

Which compensation remained unchanged?

Cigarette-stamping agents, Motor Vehicle Fuel Sales Tax and Virginia Fuels Taxes dealers, and the prepaid wireless E-911 fee discount described for 2011.

Citations and references

• House Bills 29 and 30, 2010 Va. Acts chs. 872 and 874.
• Va. Code § 58.1-202.1.
• Virginia Tax Bulletin 10-5.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-71

Original ruling text

TAX BULLETIN 10-5
Virginia Department of Taxation

May 17, 2010

IMPORTANT INFORMATION REGARDING

DEALER DISCOUNTS

Effective beginning with the June, 2010 return due July 20, 2010, legislation enacted in the 2010 Session of the General Assembly, House Bill 29 and House Bill 30 (2010 Acts of Assembly , Chapters 872 and 874), reduces or suspends the dealer discounts allowed to some dealers for collecting and remitting certain taxes.

Retail Sales and Use Tax (Including Vending Machine and Public Facilities Filers)

Dealers Required to Remit by Electronic Funds Transfer

Beginning with the June, 2010 return due July 20, 2010, dealers required to remit the Retail Sales and Use Tax by electronic funds transfer ("EFT") may no longer retain a dealer discount. Va. Code § 58.1-202.1 requires any dealer who has an average monthly Retail Sales and Use Tax liability exceeding $20,000 to remit the Retail Sales and Use Tax by EFT. Any dealer may choose to make payments electronically, but the suspension of the dealer discount only applies to dealers who are required to remit the tax by EFT.

TAX annually determines which dealers have an average monthly Retail Sales and Use Tax liability exceeding $20,000 and notifies those dealers that they are required to remit the Retail Sales and Use Tax by EFT effective beginning July 1. Those dealers are required to continue remitting the Retail Sales and Use Tax by EFT until notified by TAX that they no longer meet the threshold for the requirement. Any dealer who is not certain whether the suspension of the dealer discount applies to him under the mandatory EFT payment provisions should contact TAX at (804) 367-8037 to confirm the correct account status.

All Other Dealers

The legislation reduces the dealer discount available to all other dealers. The dealer discount will continue to be allowed on the first three percent of the four percent state Retail Sales and Use Tax and will be computed without regard to the number of certificates of registration that a dealer holds. The current discount percentages, however, will be reduced to the percentages listed in the following table. In order to simplify the calculation on the Retail Sales and Use Tax returns and worksheets, dealers may use the discount factors listed in the following table and on the worksheets to calculate their discount:

Retail Sales and Use Tax Dealer Discounts Available to Dealers

NOT Required to Remit Payments by EFT

Monthly Taxable Sales
Monthly Taxable Sales
Statutory

Discount

Percentage
General Sales Discount Factor
Qualifying Food Discount Factor

At Least
But Less Than

$0
$62,501
1.6%
.012
.016

$62,501
$208,001
1.2%
.009
.012

$208,001
And Up
0.8%
.006
.008

Vending Machine Sales

As vending machine sales are also subject to the Retail Sales and Use Tax, the dealer discount available for vending machine sales will be reduced in the same manner. Dealers required to remit the Retail Sales and Use Tax on vending machine sales by EFT will no longer be allowed to retain a dealer discount. The dealer discount will be reduced for all other dealers. The dealer discount will continue to be allowed on the first four percent of the five percent state Retail Sales and Use Tax on vending machine sales and will be computed without regard to the number of certificates of registration that a dealer holds. The current percentages will be reduced to the percentages listed in the following table. In order to simplify the calculation on the Vending Machine Return worksheet, dealers may use the discount factors listed in the following table and on the worksheet to calculate their discount:

Vending Machine Sales Dealer Discounts Available to Dealers

NOT Required to Remit Payments by EFT

Monthly Taxables Sales
Monthly Taxables Sales
Statutory

Discount

Percentage
Discount Factor

At Least
But Less Than

$0
$62,501
1.6%
.0128

$62,501
$208,001
1.2%
.0096

$208,001
And Up
0.8%
.0064

Quarterly Filers

Those dealers who file on a quarterly basis will have the Retail Sales and Use Tax dealer discount available to them reduced effective with the quarterly return for the period beginning July 1, 2010 due October 20, 2010. Quarterly filers will be allowed to retain the current dealer discount for the quarterly return for April, May, and June of 2010 due July 20, 2010. The Retail Sales and Use Tax dealer discount for quarterly filers will be at the same discount percentages and discount rates as for all other dealers.

Seasonal Filers

Seasonal Filers will have the Retail Sales and Use Tax dealer discount available to them reduced effective with the June return due July 20, 2010, if applicable, or with the first return they are required to file after June 30, 2010. The Retail Sales and Use Tax dealer discount for seasonal filers will be at the same discount percentages and discount rates as for all other dealers.

Digital Media Fee

As the Digital Media Fee is administered by TAX in the same manner as the Retail Sales and Use Tax, the dealer discount available for the Digital Media Fee will be reduced in the same manner. Dealers required to remit the Digital Media Fee by EFT will no longer be allowed to retain a dealer discount. The dealer discount will be reduced for all other dealers. The dealer discount will continue to be allowed on the first three percent of the ten percent Digital Media Fee and will be computed without regard to the number of certificates of registration that a dealer holds. The current percentages will be reduced to the percentages listed in the following table. In order to simplify the calculation on the Digital Media Fee Return worksheet, dealers may use the discount factors listed in the following table and on the worksheet to calculate their discount:

Digital Media Fee Dealer Discounts Available to Dealers

NOT Required to Remit Payments by EFT

Monthly Taxables Sales
Monthly Taxables Sales
Statutory

Discount

Percentage
Discount Factor

At Least
But Less Than

$0
$62,501
1.6%
.0048

$62,501
$208,001
1.2%
.0036

$208,001
And Up
0.8%
.0024

Tire Recycling Fee

Dealers will no longer be allowed to retain a dealer discount for accounting for and remitting the Tire Recycling Fee effective with the quarterly return for the period beginning July 1, 2010 due October 20, 2010. Dealers will be allowed to retain the current dealer discount for the quarterly return for April, May, and June of 2010 due July 20, 2010. The Tire Recycling Fee is remitted quarterly by each dealer to TAX when the dealer files his Form T-1, Virginia Tire Recycling Fee Return.

Communication Sales and Use Tax

Beginning with the June, 2010 return due July 20, 2010, providers will no longer be allowed to retain a dealer discount for accounting for and remitting the Communications Sales and Use Tax. The Communications Sales and Use Tax is remitted monthly by each provider to TAX when the provider files his Form CT-75, Virginia Communications Taxes Return.

E-911 Tax on Landline Telephone Service

Beginning with the June, 2010 return due July 20, 2010, providers will no longer be allowed to retain a dealer discount for accounting for and remitting the Landline E-911 Tax. The Landline E-911 Tax is remitted monthly by each provider to TAX when the provider files his Form CT-75, Virginia Communications Taxes Return.

Tobacco Products Tax

Beginning with the June, 2010 return due July 20, 2010, distributors will no longer be allowed to retain a dealer discount for accounting for and remitting the Tobacco Products Tax. The Tobacco Products Tax is remitted monthly by each distributor to TAX when the distributor files his Form TT-8, Virginia Tobacco Products Tax Return.

Retained Dealer Discounts

House Bill 29 and House Bill 30 (2010 Acts of Assembly , Chapters 872 and 874), did not change the current compensation available to cigarette stamping agents on sales of Virginia revenue stamps nor did the legislation change the dealer discounts allowed for the Motor Vehicle Fuel Sales Tax and the Virginia Fuels Taxes. In addition, those dealers that will be required to remit the new prepaid wireless E-911 fee beginning January 1, 2011 will also retain the five percent dealer discount allowed for the fee.

TAX is mailing information to all active taxpayers regarding these changes to the dealer discounts. For additional information, please visit TAX's website, www.tax.virginia.gov . If you have any questions regarding this Tax Bulletin, you may also contact TAX at (804) 367-8037 or through the "Live Chat" service on TAX's website, www.tax.virginia.gov .