BEWARE! Virginia Use Tax Audits

Rebecca R. Schmidt, CPA

May 13, 2015

Virginia Use Tax Audits are on the rise, especially for dental practices! 

The commonwealth of Virginia has found a goldmine in performing Use Tax audits so please be sure to read the 2015 client letter and alert us if use tax filings need to be prepared for your business.

What is Use Tax???  When you purchase supplies, equipment, furniture, etc. the vendor who sells you that product collects sales tax from you, the consumer, and then the vendor sends Virginia the sales tax money it collects each month.  Some vendors are not required to collect sales tax from you due to state sales tax rules, but you, the consumer, are still required to pay “sales” tax on all products you purchase.  It is called Use Tax when it is not collected by the vendor who sold you the product because you are the user of the product and you are responsible to pay the tax. 

What do you need to do???  Look at every invoice/receipt you get for products you purchase and see if the vendor charged you Sales Tax.  If they didn’t then you are responsible to pay the Use Tax on that item.  You file and pay Use Tax monthly to the state; our office can help you get that started if it is new to you.

The best example we have is Amazon purchases.  The states are currently working with Amazon to ensure they collect proper sales tax, but sometimes we order products from Amazon and they don’t charge us Sales Tax.  When that happens we put the receipt in a file and at the end of each month we pull out that file and prepare our Sales and Use Tax report and pay any Use Tax that is due.

Every business probably has at least one purchase each year that would need Use Tax paid on it so please keep an eye out for these types of purchases because once you begin filing Sale and Use Tax reports with the state it limits your historical exposure to audit and helps keep your business off the radar.

Don’t let Sales and Use Tax become a problem in your business, act now!


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