Understanding Virginia sales tax nexus determines whether your business must collect and remit sales tax in the Commonwealth. For e-commerce sellers and remote retailers, nexus rules create compliance obligations that demand attention. Not “someday.” Right now.
Since the 2018 Wayfair decision, Virginia has actively enforced economic nexus thresholds. Cross them, and you’re responsible for collecting tax from every Virginia customer. Miss them, and you’re risking audits, penalties, and back taxes that can devastate a growing business.
Hands Off Sales Tax (HOST) specializes in nexus analysis across all 50 states. From determining where you’ve triggered obligations to managing registration and ongoing filings, we handle Virginia sales tax compliance so you can focus on growth.
What Is Sales Tax Nexus in Virginia?
Sales tax nexus is the connection between your business and Virginia that creates a legal obligation to collect and remit sales tax. Once you establish nexus, you must register with the Virginia Department of Taxation, collect the appropriate tax from customers, and file returns on schedule.
Virginia recognizes two primary types: physical presence nexus and economic nexus. Both create the same obligation. You must collect Virginia’s 5.3% state sales tax plus applicable local taxes (combined rates range from 5.3% to 7% depending on locality).
Physical Presence Nexus in Virginia
Physical presence nexus is straightforward. Any tangible connection between your business and Virginia creates nexus immediately, regardless of sales volume.
What Creates Physical Presence
Virginia considers physical presence established through:
- Office, warehouse, or retail location: Leasing or owning property in Virginia creates immediate nexus, whether it’s a storefront, distribution center, or corporate office.
- Inventory storage: Goods stored in Virginia including third-party warehouses or fulfillment centers like Amazon FBA facilities, establish nexus. If your products sit in a Virginia warehouse awaiting shipment, you have nexus.
- Employees or contractors: Having employees, sales representatives, or independent contractors working in Virginia creates nexus. This includes remote employees living in Virginia who work for your out-of-state company.
- Temporary presence: Attending trade shows, conferences, or selling at events in Virginia can create nexus, especially if you make sales during these events.
- Affiliate relationships: Virginia presumes nexus if any commonly controlled person (sister company, affiliate, related entity) maintains a distribution center, warehouse, fulfillment center, or office in Virginia that facilitates delivery of your products. Even without your own presence, an affiliate’s Virginia operations can create your nexus obligation.
The physical presence standard is unforgiving: any tangible footprint means you collect Virginia sales tax from day one. No minimum sales threshold. No grace period.
Economic Nexus: The $100,000 Threshold
Following the Supreme Court’s Wayfair decision in June 2018, Virginia adopted economic nexus rules effective July 1, 2019. These rules require remote sellers with no physical presence to collect sales tax once they exceed economic thresholds.
Virginia’s Economic Nexus Thresholds
Virginia establishes economic nexus when a remote seller meets either criterion in the current or previous calendar year:
- $100,000 in gross revenue from sales to Virginia customers, OR
- 200 or more separate transactions with Virginia customers
The thresholds are measured based on either the previous calendar year or the current calendar year. Once you exceed either threshold, you must register and begin collecting Virginia sales tax.
How Virginia Calculates Economic Nexus
Virginia measures gross revenue from all sales into the state, including tangible personal property, digital products, and taxable services sold to Virginia customers.
Exempt sales like wholesale transactions or sales to tax-exempt organizations still count toward your gross revenue threshold. The $100,000 figure represents total sales, not taxable sales.
The 200-transaction threshold counts each individual sale as one transaction. Selling $50 items exclusively means hitting 200 transactions generates only $10,000 in revenue, which is well below the dollar threshold but still triggering nexus through transaction count.
When Must You Register?
Virginia requires registration within 30 days of exceeding thresholds. If you exceeded thresholds in the previous calendar year, you must register by January 1 of the current year and begin collecting tax on all subsequent sales.
Marketplace Facilitator Laws in Virginia
Virginia enacted marketplace facilitator legislation effective July 1, 2019, shifting collection responsibility to platforms like Amazon, eBay, Etsy, and Walmart Marketplace.
Marketplace facilitators meeting Virginia’s economic nexus thresholds must collect and remit sales tax on all marketplace sales, including third-party seller transactions. This relieves individual marketplace sellers from collecting Virginia sales tax on sales made through these platforms. The platform handles it automatically.
You remain responsible for Virginia sales tax on direct sales through your own website or sales channels outside the marketplace. If you sell through Amazon (where Amazon collects) and your own Shopify store (where you must collect), you need to track both channels separately.
Virginia Sales Tax Rates
Virginia imposes a 5.3% state sales tax rate on most retail transactions. Combined state and local rates vary by jurisdiction due to additional local option taxes:
- Most of Virginia: 5.3% (state rate only)
- Northern Virginia localities (Arlington, Fairfax, Loudoun, Prince William): 6% (5.3% state + 0.7% local)
- Hampton Roads/Historic Triangle (Virginia Beach, Norfolk, Hampton, Newport News): 6% (5.3% state + 0.7% local)
- Certain other localities: Additional local taxes bringing combined rates to 7%
Remote sellers must charge the correct rate based on the customer’s destination address. Virginia requires destination-based sourcing. You collect tax based on where the product is delivered, not where your business is located.
For businesses with Virginia physical presence selling across state lines, understanding multi-state nexus becomes exponentially more complex. HOST provides comprehensive nexus analysis determining obligations in all states where you may have triggered thresholds.
Registration and Filing Requirements
Once you establish Virginia sales tax nexus, registration with the Virginia Department of Taxation becomes mandatory.
How to Register
Virginia offers online registration through Virginia Tax Online. You’ll need your Federal Employer Identification Number, business information, NAICS code, expected monthly sales tax collection amount, and details about nexus type.
Virginia does not charge a fee for sales tax registration. Virginia issues a Certificate of Registration (Form ST-4) once approved, typically within 7-10 business days. If you have a physical location in Virginia, you must display this certificate prominently at your registered location.
HOST handles all registration paperwork, following up with Virginia to ensure permits are issued promptly and correctly.
Filing Frequency and Deadlines
Virginia assigns filing frequency based on your average monthly tax liability, either monthly or quarterly. All returns are due on the 20th of the month following the reporting period, regardless of filing frequency.
- Monthly filers: Returns due the 20th of the following month (e.g., April return due May 20)
- Quarterly filers: Returns due the 20th of the month following quarter end (quarters end March 31, June 30, September 30, December 31)
Virginia may adjust your filing frequency as your business grows or contracts. All returns must be filed electronically through Virginia Tax Online, even if no tax is due (zero returns are required).
Late filing penalties start at 6% of tax due, increasing 6% per month up to 30% maximum. Interest accrues daily on unpaid balances.
Common Virginia Nexus Scenarios
Amazon FBA and Virginia Warehouses
Amazon operates multiple fulfillment centers in Virginia. Enrolling in FBA automatically creates physical presence nexus in Virginia when your inventory is stored at Virginia facilities.
Amazon provides inventory placement reports showing which fulfillment centers hold your products. If Virginia appears on this report, you have nexus regardless of whether you directed inventory there or Amazon placed it automatically.
Remote Employees in Virginia
Hiring remote employees living in Virginia creates physical presence nexus immediately. Even a single employee working from home in Virginia establishes sufficient connection requiring registration and collection, even if sales were previously below economic nexus thresholds.
Voluntary Disclosure Agreements for Past Nexus
Discovering you had Virginia nexus but weren’t collecting sales tax creates potential liability for back taxes, penalties, and interest. Virginia offers Voluntary Disclosure Agreements (VDAs) to resolve past obligations with reduced penalties.
Benefits of VDA
Virginia’s VDA program typically provides:
- Limited lookback period (usually 3 years instead of the full statute of limitations)
- Waived penalties on voluntarily disclosed tax
- Interest charged only from the liability date
The program requires you to register, file all returns within the lookback period, and remain compliant going forward. Virginia grants amnesty only to taxpayers who come forward before an audit or notice.
HOST manages the entire VDA process, from initial application through final filing, ensuring you resolve past liabilities while minimizing financial impact.
Virginia Audit Risks and Compliance
Virginia Department of Taxation actively audits businesses for sales tax compliance. Common audit triggers include consistent zero returns despite significant business activity, large use tax liabilities, industry-specific targeting, and significant variances between income tax and sales tax reporting.
Audits typically review 3-4 years of transactions. Penalties for non-compliance can be severe. Beyond the 6% per month penalty on late filing, Virginia imposes penalties for negligence (10% of underpaid tax), substantial understatement, and fraud (50% of underpaid tax plus potential criminal charges).
HOST provides audit defense services, organizing documentation, responding to auditor requests, and representing your interests throughout the examination.
HOST: Your Partner for Virginia Sales Tax Compliance
Virginia sales tax nexus rules demand attention whether you’re crossing economic thresholds, storing inventory in Virginia warehouses, or hiring your first Commonwealth-based employee. Understanding obligations is just the start. Managing ongoing compliance without diverting focus from core business operations requires expertise. That’s where we come in!
What HOST Delivers
Nexus Analysis: We analyze your complete sales footprint, determining precisely where you’ve triggered Virginia nexus and identifying obligations in all other states.
Sales Tax Registration: We handle Virginia registration paperwork, navigating the Department of Taxation’s requirements and securing your Certificate of Registration.
Automated Filing: We prepare and file your Virginia returns monthly or quarterly based on your assigned frequency, ensuring every deadline is met.
Software Optimization: We review and optimize your sales tax automation tools to calculate Virginia’s destination-based rates correctly and avoid costly configuration errors.
Notice Management: We interpret and respond to Virginia Department of Taxation notices, resolving issues efficiently while protecting you from unnecessary penalties.
Audit Defense: We’re your trusted partner in resolving Virginia sales tax audits, organizing documentation and defending your position to minimize liability.
Voluntary Disclosure Agreements: If you discover past Virginia obligations, we file VDAs limiting lookback periods and abating penalties.
We’ve focused exclusively on sales tax since 1999. Over 25 years helping businesses navigate complex compliance requirements. Founded by Mike Espenshade, with parent company TaxMatrix serving North America’s largest companies, we bring enterprise expertise to e-commerce sellers of all sizes.
Ready to Handle Your Virginia Sales Tax Obligations?
Virginia sales tax nexus creates real compliance obligations that don’t disappear if ignored. Whether you’re expanding into Virginia for the first time, managing existing obligations, or discovering past nexus you weren’t aware of, professional guidance eliminates guesswork and prevents costly mistakes.
Every hour spent researching Virginia regulations, filing returns, or responding to notices is an hour not spent growing your business.
At HOST, we combine deep technical expertise with transparent communication and personalized support. When you’re ready to ensure Virginia compliance supports growth rather than hindering it, we’re ready to help.
Contact HOST today to discuss your Virginia sales tax needs or schedule a free consultation. Let us handle the tax so you can focus on sales.
Want to learn more? Get our “10 Sales Tax Mistakes E-Commerce Sellers Make” e-book.
Frequently Asked Questions
What is the Virginia sales tax nexus threshold for remote sellers?
Virginia establishes economic nexus when remote sellers exceed $100,000 in gross revenue OR 200 or more separate transactions with Virginia customers in the current or previous calendar year. Meeting either threshold requires registration and collection.
Does storing inventory in Virginia create nexus?
Yes. Storing inventory in Virginia creates physical presence nexus immediately, regardless of sales volume. This includes third-party warehouses like Amazon FBA facilities located in Virginia.
Do I need to collect Virginia sales tax if I sell through Amazon?
If you sell exclusively through Amazon’s marketplace, Amazon collects and remits Virginia sales tax as the marketplace facilitator. However, you remain responsible for collecting tax on direct sales through your own website or other channels if you have Virginia nexus.
What happens if I had Virginia nexus but wasn’t collecting tax?
You may owe back taxes, penalties, and interest for the period you had nexus without collecting. Virginia offers Voluntary Disclosure Agreements that limit lookback periods (typically 3 years) and waive penalties if you come forward before an audit.
How do I know which Virginia sales tax rate to charge?
Virginia requires destination-based sourcing. Charge the rate applicable to your customer’s delivery address. Most of Virginia uses the 5.3% state rate, while Northern Virginia and Hampton Roads localities add 0.7% local tax for combined 6% rates. Some localities reach 7% combined.
Can remote employees create Virginia sales tax nexus?
Yes. Having even one remote employee living and working in Virginia creates physical presence nexus immediately, requiring you to register and collect Virginia sales tax on all sales to Virginia customers regardless of dollar amount.
