Administrative Code

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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 500. Business, Professional and Occupational License Tax Regulations

23VAC10-500-350. The licensable privilege of wholesale selling.

A. Whether or not a sale of tangible personal property is properly classified as wholesale selling depends on the facts and circumstances of the particular transaction under consideration. Wholesale trade is generally recognized as the selling at such prices and in such quantities to others who will then resell such goods either to ultimate consumers or further down the normal distribution chain. Wholesale trade may also include sales to industrial, commercial, or governmental users where goods sold will be used by the buyer in its productive processes.

B. Although no single factor such as price, purpose, or place of sale may always distinguish between wholesale and other types of sales, the following inquiries may be helpful:

1. Is the sale to an individual consumer for the consumer's own personal use? This type of transaction is never considered a wholesale sale for BPOL purposes regardless of whether the taxpayer sells the item at a purported "wholesale price" or sells the item from a business facility that appears to be a wholesale establishment.

2. Is the sale to another merchant for resale? Transactions in which the taxpayer is selling new "in the box" items to a merchant for retail or distribution to other retailers or wholesalers are wholesale sales for BPOL purposes. Sales of used goods for resale may be wholesale depending upon the facts and circumstances of the transaction.

C. Taxpayers engaged in the business of selling goods to a government, institutional, business, or industrial entity for consumption, use or incorporation in an assembly, manufacturing or processing operation are typically subject to the BPOL tax on wholesalers. "Wholesale price" can be an important factor in classifying this type of sales activity, especially when the transaction in question involves goods that are simultaneously offered to individual consumers at a higher price. Examples of these wholesale activities include:

1. Bulk quantity sales of goods for maintenance of facilities or equipment;

2. Sales of materials or components for incorporation into a product; or

3. The supplying of machinery, fixtures or furnishings.

D. Factors that help distinguish between wholesale and retail selling:

1. Retail:

a. Personal use by individual consumers; or

b. Retail price offered to consumers.

2. Wholesale:

a. Sale for resale;

b. Volume;

c. Sale to government, institutional, or industrial entity for input into productive process; or

d. Sales by the original manufacturer.

Statutory Authority

§ 58.1-3701 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 24, Issue 23, eff. October 6, 2008.

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