Virginia Pre-Files Economic and Marketplace Nexus Legislation

Virginia has pre-filed legislation for the 2019 legislative session that would impose a sales and use tax collection obligation on remote sellers and marketplace facilitators that exceed an economic threshold.

Under the legislation, a seller is deemed to have sufficient activity within Virginia to require registration if in the previous or current calendar year the seller:

• Receives more than $100,000 in gross revenue, or other minimum amount as may be required by federal law, from retail sales in the Commonwealth; or
• Engages in 200 or more separate retail sales transactions, or other minimum amount as may be required by federal law, in the Commonwealth

The legislation defines a marketplace facilitator as a person that contracts with a marketplace seller to facilitate, for consideration, the sale of the marketplace seller’s products through a physical or online marketplace. Marketplace facilitators are deemed to have sufficient activity within Virginia to require registration if they meet at least one requirement falling under each of the following subsections (1), (2), and (3):

• Engages, either directly or indirectly, in any of the following activities:
  1. Transmitting or communicating an offer or acceptance between a purchaser and a marketplace seller;
  2. Owning or operating the infrastructure, whether electronic or physical, or technology that brings purchasers and marketplace sellers together; or
  3. Providing a virtual currency that purchasers are allowed or required to use to purchase products from the marketplace seller;
• It engages in any of the following activities with respect to a marketplace seller’s products:
  1. Payment processing;
  2. Fulfillment or storage;
  3. Listing products for sale;
  4. Setting prices;
  5. Branding sales as those of the marketplace facilitator; and
• Establishes economic nexus through either of the following activities in the previous or current calendar year:
  1. Facilitating sales in Virginia that, in the aggregate, generate more than $100,000 in gross revenue, or other minimum amount as may be required by federal law; or
  2. Facilitating 200 or more separate retail sale transactions, or other minimum amount as may be required by federal law

The proposed legislation, Senate Bill No. 1083, will be considered once the Virginia legislative session opens on January 9, 2019. It is referred to the Committee on Finance. (S.B. No. 1083, Virginia General Assembly, Prefiled December 15, 2018)