West Virginia — Sales & Use Tax

West Virginia imposes a "consumers sales and service tax" at 6% on retail sales of tangible personal property, custom software, and taxable services. The tax is imposed on the ultimate consumer, but collected and remitted by the vendor.

Source: W. Va. Code § 11-15-1

The rate is 6% on most sales and services. Gasoline and special fuel remain taxable at 5%.

Source: W. Va. Code § 11-15-3

All sales of goods and services are presumed subject to tax unless a specific exemption applies. This is broader than many states — West Virginia's tax reaches all services unless specifically exempted, not just enumerated taxable services.

Source: West Virginia Tax Division – Sales and Use Tax

Municipalities may impose an additional local sales and use tax of up to 1%, for a combined maximum rate of 7%. Approximately 100 municipalities currently levy the 1% local tax. Municipal tax applies to the same items as the state tax, with limited exceptions. Motor vehicles and motor fuels are excluded from municipal tax; sales of motor vehicles are subject to a separate 5% DMV sales tax administered outside the general sales tax system.

Source: Municipal Sales and Use Tax

West Virginia also imposes a complementary use tax at the same 6% rate on the use of tangible personal property, custom software, or taxable services in West Virginia when sales tax has not been paid. The use tax prevents avoidance of the sales tax through out-of-state purchases.

Source: W. Va. Code § 11-15A-1 et seq.

The vendor is personally liable for collecting and remitting the tax unless the vendor obtains a valid exemption certificate or direct-pay permit from the purchaser.

Source: TSD-300 Sales and Use Tax Exemptions

Remote sellers without a physical presence in West Virginia must collect and remit sales and use tax if, during the current or previous calendar year, they have either (1) more than $100,000 in gross sales of products and services delivered into West Virginia, or (2) 200 or more separate transactions delivered into the state. The thresholds include both taxable and nontaxable sales. This requirement took effect January 1, 2019, following the U.S. Supreme Court's decision in South Dakota v. Wayfair, Inc.

Source: Administrative Notice 2018-18; Remote Sellers and West Virginia Sales and Use Tax

Marketplace facilitators meeting economic nexus thresholds must collect and remit West Virginia sales and use tax on all taxable sales made on their own behalf or facilitated for marketplace sellers. The facilitator is deemed an agent of the marketplace seller. A marketplace facilitator must collect tax when it meets either (1) more than $100,000 in gross sales into West Virginia, or (2) 200 or more separate transactions into the state, during the current or immediately preceding calendar year. These thresholds include both taxable and nontaxable sales. The requirement applies to sales made on and after July 1, 2019.

Source: W. Va. Code § 11-15A-6b

Any person engaging in business in West Virginia must obtain a Business Registration Certificate from the Tax Commissioner before beginning business. The certificate is required for each fixed business location and carries a $30 tax. Remote sellers meeting economic nexus thresholds ($100,000 in sales or 200 transactions) must register through the state's online registration system or the Streamlined Sales Tax Registration System.

Source: W. Va. Code § 11-12-3; Remote Sellers and West Virginia Sales and Use Tax

West Virginia assigns each registered vendor a filing frequency—monthly, quarterly, or annual—based on the vendor's sales and use tax liability. The Tax Division notifies vendors of their assigned frequency upon registration and may review and adjust it annually based on filing history.

Filing frequency thresholds are determined by tax collection volume:

• Monthly filing is required for vendors who collect sales tax in excess of $250 per month.
• Quarterly filing is permitted when the average monthly remittance is $250 or less.
• Annual filing is permitted when the aggregate annual sales and use tax to be remitted is $600 or less.

The Tax Division assigns the initial frequency based on the information the vendor provides during registration. Remote sellers registering after meeting economic nexus thresholds are assigned a frequency based on their anticipated taxable sales. The Division may adjust a vendor's filing frequency on an annual basis depending on actual filing history.

Due dates are uniform across all filing frequencies: returns and payments are due by the 20th day of the month following the close of the reporting period. For monthly filers, a January return is due February 20; for quarterly filers, a Q1 (January–March) return is due April 20. Annual filers must file by January 30 of the following year (30 days after the close of the calendar or fiscal year). When the 20th falls on a weekend or holiday, the due date moves to the next business day.

Zero returns must be filed even when no sales tax was collected during the period; failure to file a zero return can result in penalties and interest.

Electronic filing is required for vendors who paid more than $25,000 in sales tax liability during the previous year. All other vendors may file electronically through the MyTaxes portal or by mailing Form CST-200CU.

Source: TSD-100 Business Taxes Source: Remote Sellers and West Virginia Sales and Use Tax Source: Sales and Use Tax

West Virginia exempts sales of services, machinery, supplies, and materials directly used or consumed in the activity of manufacturing from sales and use tax. This exemption applies to items used in an integral and essential part of the manufacturing process, as contrasted with items that are merely incidental, convenient, or remote to that activity. The exemption has been governed by the "direct use concept" since July 1, 1987.

Statutory framework

W. Va. Code § 11-15-9(b)(2) provides the exemption for "sales of services, machinery, supplies, and materials directly used or consumed in the activities of manufacturing." To qualify for this exemption, a taxpayer must first pay the tax to the vendor and then apply to the Tax Commissioner for a refund or credit—or provide the vendor with a valid West Virginia direct pay permit number.

Definition of "manufacturing"

West Virginia defines "manufacturing" as a systematic operation or integrated series of systematic operations engaged in as a business or segment of a business that transforms or converts tangible personal property through physical, chemical, or other changes. The manufacturing process begins with the arrival of raw materials and continues until the property has reached the point where no further chemical, physical, or other changes are to be made to the item in the production process.

"Direct use" standard

Under the direct use concept, the manner in which tangible personal property is used in the manufacturing process determines its taxability—not the type of property or the location where it is used. Items qualify as "directly used" when they constitute an integral and essential part of the manufacturing activity; purchases used in activities or operations that are incidental, convenient, or remote to manufacturing remain taxable.

The following uses are treated as direct use in manufacturing and therefore exempt:

• Raw materials physically incorporated into and becoming part of the completed product
• Tangible personal property or services causing a direct physical, chemical, or other change upon property undergoing manufacturing
• Machinery, tools, and equipment used to assemble, process, or transform the product during manufacturing
• Machinery, tools, repair parts, and materials used to repair and maintain equipment directly used in manufacturing
• Property or services used to convey or unload raw materials into storage or from storage to the production line
• Property or services used in storage of raw materials or partially finished manufactured goods
• Property or services used to convey partially finished goods from storage to the production line or from one part of the production line to another
• Quality control items used to test and inspect products during production
• Machinery, tools, parts, and materials used to maintain plant site facilities directly used in manufacturing

The following uses are not direct use and remain taxable:

• Items used to convey finished goods from the packaging area to a storage area for ultimate shipment (the manufacturing process ends at packaging)
• Property or services used in activities outside the production process, such as marketing, general management, supervision, finance, training, accounting, and administration
• Machinery, tools, parts, and materials used to maintain site facilities other than facilities directly used in manufacturing
• Safety equipment or clothing (such as shoes, goggles, or safety gloves), unless directly used in the manufacturing process itself

Apportionment for dual-use items

When an item is used in both a taxable and exempt manner, apportionment of the tax may be necessary. The apportionment must be performed using a reasonable method acceptable to the Tax Commissioner. For example, a forklift used both to move raw materials during production (exempt) and to move finished goods to storage (taxable) would require an allocation based on actual use.

Claiming the exemption

Manufacturers typically claim the exemption in one of two ways:

1. Pay and refund: Pay sales tax to the vendor at the time of purchase and then file Form CST-240 (Claim for Refund or Credit of Sales Tax Paid to a Vendor/Reseller) to recover the tax. The lookback period for refund claims is thirty-six months.

1. Direct pay permit: Apply for a Direct Pay Permit using Form CST-250 (Consumer Sales and Use Tax Application for Direct Pay Permit). Once issued, the manufacturer provides the permit number to vendors, who do not charge sales tax. The manufacturer self-assesses and remits use tax only on purchases that do not qualify for the exemption.

Source: W. Va. Code § 11-15-9 Source: TSD-358 Direct Use Guidelines