Understanding Sales Tax Exemptions In Virginia

“What is a Virginia sales tax exemption certificate?” is a question businesses might come across when looking to operate in the state or expand into its market. These certificates allow eligible buyers, such as nonprofits, government agencies, or resellers, to make tax-exempt purchases.

Typically, the goal is to reduce tax liability while staying compliant. However, without proper management of these documents, businesses risk audit penalties and operational slowdowns. Manual tracking quickly becomes a burden, especially at scale.

Commenda solves this with a modern, automated platform that simplifies exemption certificate handling.

This article will walk you through the types of exemptions available in Virginia, documentation requirements, compliance risks, and best practices for managing exemption certificates effectively.

What Are Exemption And Resale Certificates?

A Virginia sales tax exemption certificate is an official document issued by the Virginia Tax Department that enables qualifying purchasers to buy goods or services without paying sales tax under specific conditions. This formal Virginia sales and use tax exemption certification serves as proof of eligibility under entity‑based or usage‑based exemptions.

A resale certificate, by contrast, is a type of exemption certificate used when a purchaser intends to resell the goods or incorporate them into taxable products later. In Virginia, businesses that buy tangible property exclusively for resale or packaging for resale must complete Form ST‑10, the Sales and Use Tax Certificate of Exemption.

Unlike broader exemption certificates, a resale certificate applies only to purchases intended for resale, not for internal use or consumption.

Who uses each certificate?

  • Entity‑based exemption certificates are presented by qualified entities like charities, government bodies, schools, and research institutions purchasing exempt items.
  • Resale certificates (Form ST‑10) are used by registered Virginia dealers, typically retailers, wholesalers, or manufacturers, buying inventory or packaging materials.

Both types are essential for audits. Virginia mandates that sellers retain properly completed exemption or resale certificates to support any tax‑exempt transactions. Failure to validate and store certificates can trigger audits, penalties, interest, or liability for uncollected tax.

Proper use and maintenance of resale or exemption documentation is integral to safeguarding businesses from compliance issues and ensures seamless participation in sales tax exemption programs.

Exemption Types Recognized In Virginia

Understanding what is exempt from sales tax in Virginia is crucial when issuing or accepting a Virginia sales tax exemption certificate. Applying the wrong exemption or failing to collect proper documentation can expose your business to costly audits and penalties.

Virginia recognizes a variety of exemption types that apply to different buyers, industries, and use cases. Below is a breakdown of the most common exemptions allowed under Virginia tax law.

1. Government and Commodities Exemptions

Sales to federal, state, or local governments and agencies, including public transit authorities, correctional facilities, and conservation districts, are exempt from tax. Utilities, U.S. flags, election materials, and bullion/coins also qualify. Certificate ST-12 may apply.

2. Agricultural Exemptions

Virginia exempts sales tax on items directly used in farming, aquaculture, forestry, feed production, and greenhouse operations. This includes seeds, livestock, equipment, fuel, and commercial fishing gear. Use Forms ST-18, ST-16, ST-17, or ST-11 depending on activity.

3. Commercial and Industrial Exemptions

Virginia exempts sales tax on materials, machinery, and packaging used directly in production, R&D, data centers, pollution control, and advanced recycling. Other exemptions apply to transportation, aerospace, oil drilling, and brewing operations. Use Form ST-11, ST-11B, ST-19, ST-20, or ST-22 depending on the activity.

4. Service Exemptions

Virginia excludes certain services from sales tax when charges are separately stated. These include professional services, repair labor, internet services, installation, transportation, diagnostic work, clothing alterations, and custom software development. Some exemptions apply only under specific conditions.

5. Media-Related Exemptions

Virginia exempts media businesses from sales tax on broadcasting equipment, leased audiovisual content, qualifying periodicals, advertising production, and materials distributed outside the state. These exemptions support publishers, broadcasters, ISPs, and educational distributors operating in media-related industries.

Eligible buyers can use Forms ST-10A, ST-20, or ST-20A to claim these exemptions.

6. Medical-Related Exemptions

Virginia provides sales tax exemptions on prescription and nonprescription drugs, medical equipment, diabetic and dialysis supplies, and accessibility aids. These exemptions benefit individuals, healthcare professionals, Medicaid recipients, and veterinarians purchasing items for medical use or patient care.

Use Form ST-13 or ST-10B (for vehicle adaptations) to claim these exemptions.

7. Miscellaneous Exemptions

Virginia exempts residential heating fuels, occasional sales, food stamps, school lunches, textbooks, and out-of-state nuclear repair items from sales tax. Buyers can use Forms ST-10, ST-15, or ST-24, where applicable, to claim these exemptions.

8. Nonprofit Exemptions

Nonprofits like 501(c)(3), (4), and (19) organizations, as well as churches, can make qualifying purchases exempt from sales tax using Forms NP-1 or ST-13A, provided they meet Virginia Tax requirements and hold a valid exemption certificate.

9. Safety-Related Exemptions

From March 11, 2021, to March 24, 2022, businesses with COVID-19 safety protocols could purchase eligible PPE, like masks, gloves, and sanitizer, exempt from sales tax under temporary legislation. This exemption has since expired.

Knowing which type of exemption applies helps ensure you’re using the correct sales tax exemption certificate in Virginia, protecting your business from compliance errors and making audits easier to manage.

State‑Specific Requirements For Exemption Certificates

Compliance with exemption certificate rules varies from State to State. The Virginia sales tax exemption certificate comes with strict standards to ensure proper documentation accompanies each exempt transaction:

Required Certificate Details

Each exemption certificate must include:

  • Buyer information: Legal name, address, and Virginia sales tax account number (or out‑of‑state registration number)
  • Seller information: Vendor details or seller name
  • Reason for exemption: Categories such as resale, nonprofit, or manufacturing
  • Signature: Authorized representative with title and date
  • Duration or effective dates (where applicable)

These details qualify the certificate as valid under Virginia Tax requirements, and sellers are expected to exercise “good faith” in acceptance.

Form Types Accepted

Virginia uses its own official forms tailored to exemption types. Common examples include:

  • Form ST‑10: Resale, lease, or packaging exemption
  • Form ST‑11 / ST‑11A / ST‑11B: Industrial, manufacturing, research, semiconductor, etc.
  • Form ST‑12: Government purchases
  • ST‑13 / ST‑10B: Medical, disability, or nonprofit-related exemptions
  • ST‑10A, ST‑20, ST‑20A, NP‑1: Services, media, nonprofit exemptions

Virginia does not accept Streamlined Sales Tax certification (SST), as it’s not a member State. Some out‑of‑state multi‑jurisdictional forms are accepted only if they fully mirror Virginia’s form content and include a Virginia permit number.

Validity Period

Are you wondering, “Do sales tax exemption certificates expire in Virginia?” Most exemption certificates in Virginia do not expire per se, but remain valid only as long as the Virginia Sales Tax Permit (or registration) remains active.  If a business changes its name, address, or permit status, the certificate may be voided.

However, nonprofit exemption letters often have an explicit expiration date and must be renewed periodically.

Electronic vs. Paper Submission

Virginia does not require businesses to submit exemption certificates to the state. Instead, the buyer provides the completed certificate directly to the seller at the time of purchase, in paper or electronic form.

Sellers must retain these documents in their files in case of an audit. There is no centralized electronic filing system for exemption certificates, though records should be stored and accessible for at least three years, which is Virginia’s minimum audit look‑back window.

Common Pitfalls And Compliance Risks

Mismanaging a Virginia sales tax exemption certificate can lead to serious compliance issues. Common pitfalls include:

  • Incomplete or missing certificates, such as those lacking buyer information, exemption reason, or signature.
  • Expired or invalid certificates, especially when sellers fail to confirm eligibility or collect updated documentation for time-limited exemptions.
  • Misuse by ineligible buyers, like individuals claiming resale or nonprofit status without proper qualification.

Consequences are steep: businesses may be assessed unpaid tax, interest, and penalties, and drawn into prolonged audits. Virginia Tax treats such omissions seriously; certificates obtained late or during audits are scrutinized and often disallowed.

Best Practices For Managing Exemption Certificates

In the state of Virginia, sales tax exemption certificate management is crucial to avoiding audit risks and preserving compliance with Virginia Tax law. Below are proven strategies tailored to the State’s requirements:

  • Collect at the Point of Transaction: Always collect a Virginia sales tax exemption certificate from any buyer claiming tax-exempt status at the time of sale. This ensures that records are complete, signed, and tied to the specific transaction, which is essential for demonstrating good-faith acceptance under 23VAC10-210-280.
  • Validate Forms Immediately: Verify each certificate for correctness: buyer and seller information, valid Virginia permit number, exemption type, signature, and date. Ensure the appropriate state-recognized form is used. Invalid or incomplete certificates may be disallowed in an audit.
  • Use Digital Storage Systems: Store certificates electronically with secure, searchable filing. Digital storage speeds retrieval during audits and avoids manual misplacement. Virginia mandates that sellers retain exemption documentation for at least three years in case of review.
  • Implement Renewal Reminders: Track expiration or business status changes. Although most Virginia certificates don’t expire automatically, certificates become invalid if the underlying permit is revoked or information changes. A proactive reminder system helps maintain valid documentation.
  • Conduct Internal Compliance Reviews: Perform periodic internal audits of exemption certificate management processes. Review whether collected forms are accurate, up-to-date, and applied to eligible transactions. This helps uncover missing or misused certificates before a formal audit.

By implementing these practices, businesses operating in the state of Virginia can minimize liability and improve preparedness. They offer a structured approach to reliable exemption certificate management.

How Commenda Simplifies Exemption Certificate Management

If you’re wondering, “How do I get a Virginia sales tax exemption certificate while also managing compliance?”, you’re not alone. Between varying forms, validation rules, and expiration tracking, even experienced tax teams struggle to stay audit-ready across jurisdictions.

Commenda makes managing exemption certificates in Virginia seamless with an automated platform built to eliminate manual errors, reduce exposure, and support your entire compliance lifecycle.

Here’s how our global sales tax platform improves exemption certificate management:

  • Automated Collection: Capture exemption certificates automatically at checkout, PO creation, or invoicing; no more chasing customers for paperwork.
  • Bulk Validation: Instantly cross-check EINs, Virginia Tax account numbers, and certificate forms against state standards in real time.
  • Cloud Storage: Secure, searchable storage ensures your certificates are always audit-ready and accessible to finance and legal teams.
  • Real-Time Alerts: Get notified when certificates are missing data, misfiled, or linked to buyers with revoked exemption status.
  • Audit Dashboard: Track certificate status, expired forms, and validation issues across all your locations in one centralized view.
  • ERP + Accounting Integrations: Commenda connects with platforms like NetSuite, SAP, QuickBooks, and more, embedding compliance into your existing workflows.

Commenda supports everything from small businesses in Richmond to enterprises managing sales tax across multiple states, providing the tools to streamline your exemption processes from day one.

With built-in workflows, real-time alerts, and centralized storage, we help you manage your Virginia sales tax exemption certificates effortlessly, ensuring you’re audit-ready every step of the way.

Getting Started With Commenda In Virginia

Managing exemption certificates in the state of Virginia doesn’t have to be manual or error-prone. Commenda equips your team with a centralized, automated platform built to handle Virginia-specific compliance, from certificate collection to validation and retention.

Here’s how to get started with Commenda:

  1. Create Your Commenda Account: Set up your business profile with relevant entity, location, and exemption preferences.
  2. Sync Your Systems: Connect Commenda with your ERP, accounting software, or POS tools for seamless certificate management.
  3. Collect or Import Documents: Upload existing certificates or trigger automated exemption requests at checkout or invoicing.
  4. Enforce Virginia Rules: Commenda auto-detects and applies all state-specific formatting, usage, and buyer eligibility rules tied to a Virginia sales tax exemption certificate.
  5. Stay Compliant: Use real-time dashboards and alerts to monitor expiration flags, validation errors, or missing data.

Our platform helps you stay organized, compliant, and efficient, without the usual administrative burden. Book a demo today and see how Commenda simplifies exemption certificate management for Virginia businesses.

FAQs: Exemption Certificates In Virginia

Q. What are the specific documentation requirements for exemption certificates in Virginia?

Virginia requires a valid exemption certificate to contain buyer and seller information, a valid Virginia tax or permit number, exemption reason, purchaser’s signature and date.

Q. How do I know if a buyer qualifies for an exemption under Virginia tax law?

Buyers must match Virginia-defined categories: resellers, manufacturers, nonprofits, government agencies, or other exempt classes per code §58.1‑609. Sellers should verify the exemption category and documentation is completed accurately.

Q. Does Virginia require periodic renewal or revalidation of exemption certificates?

Nonprofit exemption letters require periodic renewals, but most other Virginia exemption certificates typically do not expire on their own. However, they become invalid if the underlying business information changes or a sales tax permit is revoked.

Q. Can I accept out-of-state resale or exemption certificates in Virginia?

Virginia generally does not accept out-of-state resale certificates unless they mirror Form ST‑10 exactly and include the buyer’s valid VA permit number. Acceptance is at the vendor’s risk, and registration in VA is strongly advised.

Q. What happens if I can’t obtain a certificate before a sale?

If no valid certificate exists at the point of sale, the sale should be treated as taxable. Later provision of a certificate may still be rejected during audit, leaving the seller liable for unpaid tax, interest, and penalties.

Q. How does Virginia handle drop shipment transactions involving resale certificates?

For drop shipments into Virginia, the out-of-state seller should obtain a Virginia ST‑10 certificate from the reseller receiving the goods. Without it, the transaction is considered taxable.

Q. What are the penalties for exemption certificate errors in Virginia?

Errors, such as incomplete or improperly completed certificates, can result in disallowed exemptions. Sellers may face the unpaid tax liability, plus interest and penalties for noncompliance. Virginia auditors assess risk stringently.

Q. Can I automate certificate collection and validation to meet Virginia audit standards?

Yes. With Commenda, you can ensure certificates are automatically collected at the point of sale, validated, stored securely, and easily retrieved for audit. It reduces human error and helps demonstrate good-faith compliance.

Q. What is exempt from sales tax in Virginia?

Virginia offers exemptions across categories, including resale, manufacturing, government, nonprofit, medical, media, food stamps, heating fuels, and more (see Va. Code § 58.1‑609).