Sales and Use Tax Clarified for Samples by Manufacturers and Retailers

The West Virginia Tax Department has issued guidance on the sales and use tax implications for samples distributed by manufacturers and retailers. Under this guidance, taxability is determined by the use of the item, not its type. While purchases directly used in manufacturing may qualify for exemptions, samples distributed for advertising or marketing purposes are subject to sales and use tax based on their fair market value.

Samples withdrawn from inventory for free distribution to customers are not considered purchases for resale and are therefore taxable. This applies to tangible personal property used in marketing efforts, including sales samples. Businesses located within municipalities imposing a local tax should also account for an additional 1% municipal sales or use tax.

This clarification emphasizes the importance of understanding the distinction between exempt manufacturing activities and taxable marketing practices. For more information and municipal tax rates, visit the West Virginia Tax Department website.  (West Virginia Tax Division, WV—TSD 370, August 1, 2024)

Posted on August 1, 2024