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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 230. Watercraft Sales and Use Tax
3/1/2024

23VAC10-230-90. Payment of tax required for title.

A. Generally. The watercraft sales and use tax is to be paid by the purchaser or user of watercraft and is to be collected by the Tax Commissioner at the time the owner is required to apply for a title for the watercraft.

1. If a watercraft originally acquired for tax exempt use and titled without payment of tax is subsequently utilized for nonexempt purposes, it then becomes subject to the tax based on the lower of its cost or current market value.

2. If no title is required on a watercraft, then the watercraft sales and use tax will not be levied on the watercraft unless the owner chooses to apply for a title with the Department of Game and Inland Fisheries.

Unless a watercraft is exempt from the Watercraft Sales and Use Tax, title may not be issued unless the applicant shows to the satisfaction of the Department of Game and Inland Fisheries that the tax has been paid.

B. Payment and collection of tax. The tax may be paid to the Department of Taxation or to the Department of Game and Inland Fisheries except in cases where no title change is involved. In such cases, tax payment must be made directly to the Department of Taxation. See the department's website, www.tax.virginia.gov, for more information about payment and forms.

C. Dealer collection. The Tax Commissioner may also enter into agreements with registered dealers allowing them to collect the tax from their customers. If a registered dealer desires to collect the 2.0% Watercraft Sales and Use Tax on all his taxable transfers of watercraft, he may do so by signing an agreement with the Tax Commissioner. In agreeing with the Tax Commissioner to collect the 2.0% tax on transfers of watercraft, the dealer must agree to abide by the following regulations:

1. Collection of tax by dealers from their customers.

a. Generally. The tax must be paid to the Commonwealth by the dealer, but the dealer must separately state on the invoice the amount of the tax and add the tax to the sales price or charge. Thereafter, the tax is a debt from the purchaser, consumer or lessee to the dealer until paid and is recoverable at law in the same manner as other debts.

b. Advertising absorption of tax prohibited. A dealer may not advertise or hold out to the public in any manner, directly or indirectly, that he will absorb all or any part of the Watercraft Sales and Use Tax, or that he will relieve the purchaser, consumer or lessee of the payment of all or any part of the tax.

c. Erroneous collection on nontaxable transactions. Any dealer collecting the Watercraft Sales and Use Tax on nontaxable transactions must transmit to the Department of Taxation such erroneously or illegally collected tax unless he can show that the tax has been refunded to the purchaser or credited to the purchaser's account.

2. Dealers' monthly returns and payment of tax.

a. Generally. Every dealer authorized by execution of "Dealer Agreement" to collect Watercraft Sales Tax is required to file a return on or before the twentieth day of the month following each reporting period even if no tax has been collected. Returns are prescribed and furnished by the Department of Taxation.

b. Payment to accompany dealer's return. At the time of filing the return, the dealer must pay the full amount of tax collected or invoiced to purchasers. Failure to pay the tax will cause it to become delinquent.

c. Penalties. A dealer who fails to file a return and pay the full amount of tax by the due date is subject by "Dealer Agreement" to a penalty of 6.0% of the amount due for each month or portion thereof that the failure continues, not to exceed 30%. The penalty may be waived by the Tax Commissioner if there is good cause for the failure to file and/or pay on time. Request for waiver of penalty must be made in writing to the Department of Taxation and must include all pertinent facts to support the request.

d. Interest. Interest at a rate determined in accordance with § 58.1-15 of the Code of Virginia will by "Dealer Agreement" accrue on the unpaid amount of the tax from the due date until the time of payment. Interest will accrue whether or not any penalty is waived.

3. Extension not allowed. No extension will be allowed for filing and/or paying the tax due for the month.

4. Dealer compensation not allowed. A dealer will not be allowed any deduction from the amount of the 2.0% Watercraft Sales and Use Tax due on his return to compensate him for accounting for and paying the tax.

5. See 23VAC10-230-40 B for information on payment of the tax for a boat motor.

Statutory Authority

§ 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR12.3.58-685.46, eff. July 30, 1982; amended, Virginia Register Volume 25, Issue 8, eff. March 8, 2009.

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