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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 120. Corporation Income Tax
1/27/2023

23VAC10-120-220. When sales of tangible personal property deemed in this Commonwealth.

A. In general.

1. Sales of tangible personal property are in Virginia if such property is received in Virginia by the purchaser. In the case of a direct delivery to a person designated by the purchaser, a sale of such property is in Virginia if such property is ultimately received in Virginia by such designated person.

2. Receipts and transfers by persons other than the purchaser, or a designated ultimate recipient, are part of the transportation process and not considered in assigning sales to Virginia or any other state. A receipt by a person is a direct delivery to such person unless some other person is known to be the ultimate recipient at or before the time of first shipment.

3. The state in which title passes has no bearing on the state to which a sale is attributed. However, the fact that title has passed from the seller is indicative that a sale is complete and that the property is either at its ultimate destination or in transit to the ultimate destination.

B. Examples.

Example 1: The taxpayer, with inventory in State A, sold $100,000 of its products to a purchaser having branch stores in several states including Virginia. The order for the purchase was placed by the purchaser's central purchasing department located in State B. $25,000 of the purchase order was shipped directly to purchaser's branch store in Virginia. The branch store in Virginia is the "purchaser within this Commonwealth" with respect to $25,000 of the taxpayer's sales.

Example 2: The taxpayer makes a sale to a purchaser who maintains a central warehouse in Virginia at which all merchandise purchases are received. The purchaser reships the goods to its branch stores in other states for sale. All of taxpayer's products shipped to purchaser's warehouse in Virginia are property "received by a purchaser within this Commonwealth."

Example 3: A wholesaler subject to income tax in Virginia sells merchandise to a retailer in State A. Pursuant to the retailer's instructions, the wholesaler directs the manufacturer located in State B to ship the merchandise directly to the retailer's customer in Virginia. The sale by the wholesaler is a sale in Virginia.

Example 4: Same facts as in example 3 except that both the retailer and manufacturer are subject to income tax in Virginia due to other business activity. For purposes of the retailer's Virginia tax return, the sale to the retailer's customer in Virginia is a sale in Virginia. For purposes of the manufacturer's Virginia tax return, the sale to the wholesaler, which is shipped to the retailer's customer in Virginia, is a sale in Virginia. In other words, although there is only one shipment of goods, for apportionment purposes there are three sales, all of which are attributed to Virginia.

Example 5: Taxpayer sells merchandise to purchaser who is located in State A. The merchandise is manufactured at taxpayer's plant in Virginia. Purchaser pays for the merchandise but directs taxpayer to hold the merchandise until further notice. Six months later purchaser directs taxpayer to ship the merchandise to purchaser's customer in State B. The sale is complete when the purchaser pays for the merchandise. The sale is attributed to Virginia because the purchaser accepted delivery at the manufacturing plant located in Virginia.

Statutory Authority

§§ 58.1-203 and 58.1-415 of the Code of Virginia.

Historical Notes

Derived from VR630-3-415, eff. January 1, 1985.

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