23 Va. Admin. Code § 10-210-6070

Current through Register Vol. 41, No. 1, August 26, 2024

Section 23VAC10-210-6070 - Welfare assistance redeemable in goods

A. Generally. Except as provided in subsection B of this section, the tax applies to tangible personal property purchased by individuals with welfare benefits.

B. Food stamps and WIC drafts. Effective October 1, 1986, the tax does not apply to tangible personal property purchased by individuals with food coupons ("food stamps") issued by the U.S. Department of Agriculture under the Food Stamp Program or drafts (WIC drafts) issued through the Virginia Special Supplemental Food Program for Women, Infants, and Children.

C. Other purchases by food stamp and WIC program participants. The exemptions set forth in subsection B of this section, apply only to food or other items of tangible personal property actually purchased with food stamps or WIC drafts. Thus, all other purchases by food stamp and WIC program participants that are not paid for with food stamps or WIC drafts are subject to the tax.

D. Dealer's returns. In computing the total exempt sales relating to goods paid for with food stamps and WIC drafts, a dealer may make an exact accounting of such sales or may choose one of the two following alternative methods:

ALTERNATIVE 1: A dealer may compute his exempt food stamp and WIC sales by utilizing the monthly total of all food stamps deposited, plus the total number of $1 food stamps retained at the end of the month, reduced by the total amount of coinage given as change from food stamps during the month and the total number of $1 food stamps on hand on the first day of the month. To this total should be added the total amount of WIC drafts deposited during the month.

Example: Tendered to Dealer A during the month are $10,000 in food stamps on purchases of eligible foods. In addition, Dealer A had $40 in food stamps on hand on the first day of the month. Dealer A returns $1,000 of such stamps and $180 in coin to customers as change from food stamp purchases. Thus, Dealer A has taken in a net total of $9,040 in food stamps for the month. Of this total, Dealer A deposits with his bank during the month $8,990 and on the last business day of the month withholds fifty food stamps of the $1 denomination in order to have sufficient change for the next business day. In addition, Dealer A deposits WIC drafts totalling exempt purchases of $500 during the month. Dealer A would compute his total deduction from gross receipts for exempt food stamp and WIC sales as follows:

Food stamps deposited during month	$8,990
Food stamps retained at end of month	50
Food stamps on hand at first of month	(40)
WIC drafts deposited during month	500
Coin change from food stamp purchases	(180)
Total deduction for exempt food stamp and WIC sales
	$9,320

ALTERNATIVE 2: The second option available to a dealer in computing his exempt food stamp and WIC sales is to utilize the monthly total of food stamps deposited, plus the total number of $1 food stamps retained at the end of the month (reduced by the total amount of food stamps on hand on the first day of the month), multiplied by 98%. To this total should then be added the total amount of WIC drafts deposited during the month.

Dealers utilizing this approach may also seek authorization from the department to use an alternative percentage to account for coin change returned to customers from food stamps. Any such request must be accompanied by a detailed analysis of not less than one month's food stamp transactions.

Example: Tendered to Dealer B during the month are $10,000 in food stamps. In addition, Dealer B had on hand $40 in food stamps on the first day of the month. Returned to customers in change from such stamps are $1,000 in food stamps; thus, Dealer B has taken in a net total of $9,040 in food stamps during the month. Of this total, Dealer B deposits $8,990 into his bank account and retains $50 in food stamps on the last day of the month. In addition, Dealer B deposits WIC drafts totalling $500 during the month. Dealer B would compute his total deduction from gross receipts for exempt food stamp and WIC sales as follows:

Food stamps deposited during month	$8,990
Food stamps retained at end of month	50
Food stamps on hand on first day of month	(40)
$9,000 x .98 $8,820
WIC drafts deposited during month	500
Total deduction for exempt food stamp and WIC sales
	$9,320

The total exempt food stamp and WIC sales arrived at under either option would then be added to the total of other exempt sales and deducted from gross receipts when the dealer files his monthly sales and use tax return, Form ST-9. The option selected by the dealer for purposes of filing his first return for taxable periods beginning on or after October 1, 1986, must be followed for all subsequent returns, unless the dealer obtains written authorization from the Tax Commissioner for the use of an alternative method.

23 Va. Admin. Code § 10-210-6070

Derived from VR630-10-112; revised January 1, 1979; amended, eff. July 1987.

Statutory Authority

§§ 58.1-203 and 58.1-609.10(6) of the Code of Virginia.