Marketplace Facilitators and West Virginia Sales and Use Tax

• Administrative Notice 2019-21 Consumers Sales and Service Tax: Marketplace Facilitators Having Economic Nexus With West Virginia Required to Collect West Virginia Sales and Use Taxes on Sales Made On and After July 1, 2019.

• TSD-442 Marketplace Facilitators

Source: House Bill 2813 passed March 8, 2019, effective June 6, 2019.

In general, marketplace facilitators will be one of two types:

Type 1 – Some marketplace facilitators are also remote sellers who are selling their own products and services. Any remote seller presently required to collect and remit West Virginia sales and use taxes will be required to collect and remit West Virginia sales and use taxes when they facilitate a sale made on and after July 1, 2019.

Type 2 – Some marketplace facilitators only facilitate sales made for third parties. In these transactions, the marketplace facilitator is the merchant of record. Type 2 marketplace facilitators are required to collect West Virginia sales and use taxes on sales to West Virginia consumers facilitated on and after July 1, 2019.

The following frequently asked questions and answers pertain to Type 2 marketplace facilitators. Type 1 marketplace facilitators should see the frequently asked questions and answers for Remote Sellers.

What is a marketplace facilitator?

See Administrative Notice 2019-21.

Are all marketplace facilitators required to register in West Virginia?

If the marketplace facilitator is a remote seller who is already registered with the West Virginia Tax Division, the remote seller is not required to register a second time as a marketplace facilitator.

How do marketplace facilitators register in West Virginia?

A marketplace facilitator can register to begin collecting and remitting West Virginia State and municipal sales and use taxes through either of the following methods:

Register directly with West Virginia – To register only for West Virginia, use West Virginia's Online Registration System or go to Business Registration for a fill-in business application form.

Register through Streamlined Sales Tax -- To register for multiple states, including West Virginia, submit a single application through the Streamlined Sales Tax Registration System (SSTRS). There is no fee to complete and submit this online registration.

Upon completion of the registration, the remote seller will be registered to collect and remit sales and use tax in all 45 Streamlined member states.

Additional information is provided on the Streamlined Sales Tax Registration System (SSTRS) web page, and in the Streamlined Sales Tax Registration System FAQs.

A remote seller may use a Certified Service Provider (CSP) to perform its sales or use tax responsibilities when registering through the Streamlined Sales Tax Registration System (SSTRS). CSPs are certified under the Streamlined Sales and Use Tax Agreement to perform all the remote seller's sales and use tax functions, other than the remote seller's obligation to remit tax on its own purchases. A CSP is designed to allow a business to outsource most of its sales tax administration responsibilities. If a remote seller registers through the Streamlined Sales Tax Registration System (SSTRS) and contracts with a CSP to perform its sales and use tax functions (i.e., CSP Services), the CSP will file monthly sales and use tax returns on behalf of the remote seller.

See the Certified Service Provider (CSP) page for more information.

Is a marketplace facilitator required to register if it does not facilitate the making of taxable sales in West Virginia?

A marketplace facilitator that does not qualify for the small-seller exception but only makes nontaxable sales in West Virginia is not required to register to collect West Virginia sales or use tax.

For example, a marketplace facilitator that only facilitates the making of sales for resale, is not required to register for sales or use tax. However, if that marketplace facilitator also facilitates taxable sales to end-users (i.e., not for resale), then the marketplace facilitator is required to register and collect sales or use tax on those sales, unless a West Virginia exemption applies.

Note: New standards for administering sales tax laws for remote sellers have been developed by Administrative Notice 2018-18 consistent with South Dakota v. Wayfair, Inc., which approved a small-seller exception for remote sellers who (1) do not have annual sales of products and services into the state of more than $100,000 and (2) have less than 200 separate transactions for delivery in West Virginia.

See the answer to How is the small-seller exception determined? on the Remote Sellers and West Virginia Sales and Use Tax page for more information about the small-seller exception.

Are marketplace facilitators required to collect tax on sales made via the internet?

Marketplace facilitators are required to collect and remit tax on all taxable sales into West Virginia, including sales made online when they have economic nexus with West Virginia. The Internet Tax Freedom Act prohibits West Virginia from imposing a sales tax on Internet access services but does not prohibit West Virginia from taxing sales made via the Internet.

How often are marketplace facilitators required to file sales and use tax returns?

A marketplace facilitator’s filing frequency (e.g., monthly, quarterly, annually) is based on the information provided with registration. Marketplace facilitators will be notified by the Tax Division of their filing frequency based on the annual dollar amount of their taxable sales sourced to West Virginia. The Tax Division may review a remote seller's filing frequency on an annual basis and change the filing frequency based on the remote seller's filing history. If the Tax Division changes the filing frequency, the remote seller will be notified of the change.

Returns and tax payments are due on the 20th day of the calendar month following the close of the reporting period, except that the annual return is due on the 30th day following the close of the calendar or fiscal year, as the case may be.

Note: If a marketplace facilitator registers through the Streamlined Sales Tax Registration System (SSTRS) and contracts with a Certified Service Provider (CSP) to perform its sales and use tax functions (i.e., CSP Services), the CSP will file monthly sales and use tax returns on behalf of the remote seller.

How do marketplace facilitators file sales and use tax returns?

Marketplace facilitators may electronically file West Virginia sales and use tax returns using MyTaxes, the Tax Division's online filing and payment system.

Marketplace facilitators must register for a username and password prior to filing returns. Instructions for creating a username and password for MyTaxes may be found in Help.

Are marketplace facilitators required to collect and remit municipal sales and use taxes?

Marketplace facilitators registered to collect and remit West Virginia sales and use taxes must collect the applicable municipal sales and use taxes when the shipped-to physical address of the customer is located within the geographic boundaries of a municipality that imposes a sales and use tax, or the service is provided within the municipality.

West Virginia municipalities that impose a municipal sales and use tax do so at the 1% rate, including shipping and handling charges. A list of municipalities that impose sales and use tax and the applicable rate of tax is posted on the Municipal Sales and Use Tax page on our website.

Are there sales and use tax resources available for new registrants?

The following resources are available on the Tax Division website:

Streamlined Sales Tax Governing Board Inc.

The Combined Sales and Use Tax Return and Instructions are available on the Sales and Use Tax page on our website.

• TSD 100 provides information regarding West Virginia Business Taxes
• TSD 300 provides information for Sales and Use Tax Exemptions
• TSD-345 provides information for Sales Tax and Vendor Responsibilities
• TSD-406A provides information regarding Taxability of Sales Made by Certain Out-of-State Remote Sellers

The Sales and Use Tax page provides a link to Publications and the return instructions.

Where can remote sellers find information for other states?

The Streamlined Sales Tax Governing Board has developed a State Website page and a Contact Information page that provide sales tax information for both Streamlined Sales Tax member states and non-member states. Information includes links to state websites, customer service contact information, registration pages, sales and use tax rates, and taxable/exempt information for each state.

What sales sourcing rules does West Virginia follow?

West Virginia has adopted destination sourcing and the sourcing rules in the Streamlined Sales and Use Tax agreement. See W. Va. Code § 11-15B-14, 11-15B-14a, and 11-15B-15.

The general rule is that the transaction is sourced to the location where the purchaser receives the tangible personal property purchased or makes first use of the service purchased.

The hierarchy of sourcing rules is found in W. Va. Code § 11-15B-15.