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Tax Compliance

Overview: Welcome to the Tax Compliance resource page, designed to provide guidance on various tax-related responsibilities for students, scholars, employees, and other stakeholders. Explore key topics in U.S. and international taxation, working outside Virginia, and specific areas like Unrelated Business Income Tax, Sales & Use Tax, VAT/GST, Excise Tax, and other miscellaneous tax matters. Additionally, access tailored training resources to enhance your understanding of tax compliance obligations. Use the accordion-style navigation below to easily find detailed information on each topic.

Note: Virginia Tech employees are not authorized to provide personal, legal, or tax advice. Any information provided is intended for general informational purposes only and should not be construed as specific advice applicable to individual circumstances. For guidance on your personal, legal, or tax situation, please consult a qualified professional, such as a certified accountant, tax attorney, or the IRS directly. Virginia Tech assumes no responsibility for decisions made based on information provided by its employees.

A foreign national is defined simply as "an individual who is a citizen of any country other than the United States." Certain types of payments to a foreign national may be taxable, while other payments to the same person are not. Also, payments that are taxable to one foreign national may not be taxable to another because of a tax treaty. It is essential for the University to determine the taxability of each type of payment made to a foreign national in order to know whether withholding is required and the amount.

Immigration terminology and definitions are not the same as tax terminology and definitions, therefore a nonresident for tax purposes is different than a nonresident for immigration purposes.  A foreign national must be correctly classified to avoid potentially serious problems including: 

  • An unexpected tax bill at the time of departure from the U.S.
  • Penalty and interest charges for both foreign national and sponsoring department
  • Negative impact on future visa or immigration applications
Comparison of Nonresident vs. Resident for Tax Purposes
  Nonresidents Residents
Eligible
  • Resident of a country other than the U.S.
  • Company organized under the laws of a foreign country
  • Permanent Resident (green card holder)
  • Meets the "substantial presence test"
  • Company organized under U.S. law
Tax Treaty Available Yes, for some foreign nationals No, except limited exceptions for researchers and teachers
Tax Filing
  • Taxed on U.S. source income only
  • Cannot file jointly with spouse
  • Only one personal exemption allowed (except for Canada, Mexico, or South Korea)
  • No standard deduction (except for India)
  • Limitations to itemized deductions
  • Taxed on worldwide income
  • Can file jointly with spouse
  • Multiple personal exemptions allowed
  • Eligible for standard deduction
  • No limits on itemized deductions

A foreign national becomes a resident for U.S. tax purposes by passing either the “green card” or “substantial presence” tests as described in IRS Publication 519, U.S. Tax Guide for Aliens.  

Determination of Residency by Visa Type
Visa Type Nonresident Resident
F-1 & J-1 Students
  • During the first 5 calendar years in the U.S.
  • AND doesn't pass the "green card" test
  • Beginning in the 6th calendar year in the U.S.
  • OR passes the "green card" test
J-1 Non-Students
(e.g., researchers, teachers)
  • During the first 2 calendar years in the U.S.
  • AND doesn't pass the "green card" test
  • Beginning in the 3rd calendar year in the U.S.
  • OR passes the "green card" test
H-1B, TN, O-1, E-3
  • Until they pass the "substantial presence" test
  • AND doesn't pass the "green card" test
  • Once they've passed the "substantial presence" test
  • OR passes the "green card" test
B-1, WB, B-2, VWT
  • Until they pass the "substantial presence" test
  • AND doesn't pass the "green card" test
  • Once they've passed the "substantial presence" test
  • OR passes the "green card" test

If a foreign national has been issued a Permanent Resident Card, also known as a green card or USCIS Form I-551, the person is said to have passed the “green card” test. The right to lawful permanent residence is granted at the time of the final interview with the U.S. Citizenship and Immigration Services (USCIS) or the U.S. Department of State (DOS) officials and can be evidenced not only by the Permanent Resident Card but also by a stamp in the applicant's passport which states "temporary evidence of lawful permanent status”.  The Permanent Resident Card may not be manufactured or mailed for several months after the final interview, and this stamp provides immediate proof of permanent status.

A person is a resident for U.S. tax purposes for the calendar year if she or he meets the “substantial presence” test. The visa type dictates if there are any years in which a nonresident is exempt from the “substantial presence” test. The person must be physically present in the U.S. on at least:

  • 31 days during the current year, and
  • 183 days during the three-year period that includes the current year and the two preceding calendar years, counting:
  • All of the days the person was present in the current year, and
  • 1/3 of the days the person was present in the first preceding year, and
  • 1/6 of the days the person was present in the second preceding year
  • J-1 non-student visa holder (professor, researcher, etc.), who is substantially complying with the requirements of the visa, does not count days present in the first two calendar years
  • F-1 or J-1 student visa holder, who substantially complies with the requirements of the visa, does not include days present in the first five calendar years

Note: The counting rules are based on calendar years, not twelve-month periods and days counted do not need to be consecutive.

A person will not meet the substantial presence test if (1) they are present in the U.S. on fewer than 183 days during the current year, and (2) if they establish that they have a tax home in a foreign country in the current year, and (3) that they have a closer connection to that foreign country than to the U.S. (discussed in detail in IRS Publication 519, U.S. Tax Guide for Aliens).

To retain nonresident status after five years, F-1 student visa holders must establish that they have a closer connection with the foreign country than to the U.S.

U.S. Tax Responsibilities of Foreign Nationals are complex. Significant differences exist between how nonresident and resident for tax purposes are taxed. 

For tax purposes, nonresidents are only subject to U.S. taxation on income classified as U.S.-source income, while foreign-source income is not taxable in the U.S. Income is generally considered foreign-source if the activity generating the payment takes place outside the U.S., and all supporting documentation must clearly indicate the location of the activity to ensure proper classification. If the income source cannot be determined—such as when the location of the activity is not specified—the payment must be treated as U.S.-sourced under IRS regulations. Additionally, royalties, such as payments for the use of intellectual property, are considered U.S.-sourced and taxable if the property is used within the U.S. For more information, see IRS Publication 519, U.S. Tax Guide for Aliens.

Foreign nationals are strictly limited in what sources of income they are authorized to accept, and all payments are taxable unless an exception under a treaty or IRS code applies. Cl I3901355

ick on the appropriate visa type more.

Visa Type Visa Purpose Employment Eligibility Payment as an Independent Contractor Honorarium Artistic and Entertainment Performance Expense/Travel Reimbursements Prize or Award Scholarship or Fellowship Human Research Subject Payments
A-1/ A-2 Diplomat or International Government Official/ Dependent of Diplomat No No No No Yes** No No No
B-1/ B-2/ VWB/ VWT/ ESTA Visitor/Business Statuses No No Yes* No Yes* Yes (3) No No
E-3 Temporary Worker in a Specialty Occupation No No No No Yes No No No
G1/ G4 Representative of International Organization No No No No Yes** No No No
H1B/ H-4 Temporary Worker/ Spouse of H1B No No No No Yes No No No
O-1/O-3 Extraordinary Ability/ Spouse of O-1 No No No Yes Yes No No No
P-1/ P-2/
P-3		 Athlete/Entertainer Visas No No No Yes Yes No No No
TN/TD Trade NAFTA/
Spouse of TN		 No No No No Yes No No No

* Subject to the requirements of the 9/5/6 Rule, foreign nationals in B-1, B-2, WB, and WT status may accept an honorarium and/or reimbursement of travel expenses for "usual academic activity or activities" if spending 9 days or less at Virginia Tech and if the individual has accepted such payment from no more than 5 educational or research institutions (including Virginia Tech) in the previous 6-month period.

** Requires written authorization from the immigration office of the visa-sponsoring organization

Visa Type Visa Purpose Employment Eligibility Payment as an Independent Contractor* Honorarium Performance* Artistic and Entertainment Performance* Expense/Travel Reimbursements Prize or Award Scholarship or Fellowship Human Research Subject Payments*
H1B Temporary Worker Yes No No No Yes No No No
O-1 Extraordinary Ability Yes No No No Yes No No No
E-3 Temporary Worker in a Specialty Occupation Yes No No No Yes No No No
TN Trade NAFTA Yes No No No Yes Yes No No

 

*Payments such as fellowships and scholarships as well as independent contractors’ payments are outside of the visa scope for these categories of visa holders.

Visa Type Visa Purpose Employment Eligibility Payment as an Independent Contractor Honorarium Performance Performance Expense/Travel Reimbursements Prize or Award Scholarship or Fellowship Human Research Subject Payments
F-1 Student Yes** No No No Yes Yes Yes No
F-1 OPT Optional Practical Training Yes*** Yes*** Yes*** No Yes Yes Yes Yes***
F-1 CPT Curricular Practical Training Yes** No No No Yes Yes Yes No
F-2 Spouse of F-1 No No No No Yes Yes No No
J-1 Student Yes** No No No Yes Yes Yes No
J-2 Spouse of J-1 Yes*** Yes*** Yes*** No Yes Yes No No
J-1 Professor/ Researcher/ Short-Term Scholar Yes** Yes** Yes** No Yes** Yes** Yes No

** Requires written authorization from the immigration office of the visa-sponsoring organization

*** With appropriate work authorization from USCIS

Visa Type Visa Purpose Employment Eligibility Payment as an Independent Contractor Honorarium Performance Performance Expense/Travel Reimbursements Prize or Award Scholarship or Fellowship Human Research Subject Payments
F-1 Student Yes** No No**** No Yes Yes Yes No
F-1 OPT Optional Practical Training Yes*** Yes*** Yes*** No Yes Yes Yes Yes***
J-1 Student Yes** No No No Yes Yes Yes Yes**
J-1 Professor/ Researcher/ Short-Term Scholar Yes** Yes** Yes** No Yes** Yes** Yes Yes**

** Requires written authorization from the immigration office of the visa-sponsoring organization

*** With appropriate work authorization from USCIS

**** Actively enrolled students are not eligible to receive honorariums

  • In the U.S., wages are subject to taxation at graduated rates. This means the amount of tax withheld from an employee’s wages depends on their earnings. For more information about federal income taxes, see IRS Publication 15 and the section "Withholding Adjustment for Nonresident Alien Employees" in IRS Publication 15-T, Federal Income Tax Withholding.
  • Payroll is responsible for handling tax withholding on wages for foreign nationals. For detailed information about their processes and services, please visit their webpage. All questions related to tax withholding for foreign nationals should be directed to payroll@vt.edu.
  • Nonresident individuals are generally exempt from Social Security and Medicare taxes, collectively referred to as FICA taxes. This exemption applies to F-1 and J-1 students, researchers, professors, and short-term scholars in nonresident tax status. However, individuals holding H-1B, TN, E3, O-1, or LPR visas are not exempt from FICA withholdings. For more details about FICA tax liability for foreign nationals, visit the IRS website and Payroll Department webpage. If you are a nonresident and FICA taxes have been withheld from your wages, please contact the International Tax Specialist in Payroll.
  • A one-time payment to assist a student in pursuing a course of study or research.  Generally, not considered taxable income if the recipient is a candidate for a degree and the award is used to pay for tuition and fees required for all students in the course of study. For more information, please visit IRS website.
  • Often mistakenly referred to as stipends, these payments are generally subject to 14% federal income tax withholding. They typically include payments from university that cover living expenses beyond standard tuition charges. U.S.-sourced taxable scholarships and fellowship grants provided to nonresidents may be subject to either 14% or 30% withholding and reported on 1042-S.
    • Non-qualified payments made to nonresidents in F, J, M, or Q nonimmigrant status are taxed at a 14% rate and reported on Form 1042-S.
    • Nonresidents in other immigration statuses are subject to 30% withholding and reported on Form 1042-S.
    • See IRS Publication 515 for available tax treaty.  The foreign national must have a U.S. tax identification number to claim the benefit. The Payroll Office prepares tax treaty documents for eligible individuals. You can find the schedule of available appointments here.

Foreign nationals in certain visa statuses can receive honorariums under specific visa classifications, adhering to the 9/5/6 Honorarium Rule (no more than 9 days at the university, payment from no more than 5 institutions, within 6 months). Such payments to foreign nationals may also be subject to federal tax withholding in the absence of the applicable treaty provision. Contact Global Strategic Services if support letter is needed. Please see additional guidance on handling honoraria and information regarding 9/5/6 Rule here. 

Payment as a reward or recognition for a special achievement, such as winning a judged competition or payment for participation as a research subject. Standard taxation rate: 30%. Please see additional [link forthcoming] here. 

Virginia Tech acts as a withholding agent for the IRS and is obligated to withhold taxes on payments made to nonresidents for U.S. tax purposes. All payments are taxable unless specifically exempt by the IRS Code or a tax treaty. This rule also applies to students. Failure to pay the appropriate taxes can result in an unexpected tax obligation when leaving the U.S. or may jeopardize future residency applications.

A tax treaty is a bilateral agreement between the United States and another country designed to prevent double taxation. Each treaty has unique provisions and exemptions. If a foreign national qualifies for a treaty benefit, little or no tax withholding may apply. However, a U.S. tax identification number is required to claim these benefits. For more information, refer to IRS Publication 515: Withholding of Tax on Nonresident Aliens & Foreign Entities. A current Tax Treaty Listing is also available on the Virginia Tech Controller's website.

The IRS mandates that any foreign national claiming tax treaty benefits on wages or salaries earned in the U.S. must file a Form 8233 each year they wish to claim the benefit. Virginia Tech’s Payroll Office assists eligible individuals in preparing tax treaty documents. You can find the schedule of available appointments here.

There are specific rules about filing an income tax return with the IRS that nonresidents and residents for U.S. tax purposes must follow. See IRS Publication 519, U.S. Tax Guide for Aliens. More information and resources can be found Cranwell International Center website.

Failure to file the appropriate tax returns, making intentionally false or misleading statements on tax returns or otherwise failing to comply with U.S. tax law can lead to the imposition of fines and penalties including potential criminal penalties. The regulations provide that a nonresident’s tax return deductions will be allowed “only if a true and accurate return for the taxable year is filed by the nonresident alien on a timely basis.” This means that unless a timely and accurate tax return is filed, tax is assessed against the nonresident’s gross income without regard for any deductions or credits that might otherwise be allowable. Tax compliance will be evaluated at the time the foreigner seeks to leave the country.

International individuals physically present in the State of Virginia are considered Virginia residents, regardless of their federal tax residency status. However, Virginia aligns with federal practices in granting benefits under Double Taxation Avoidance Agreements (DTAAs), ensuring eligible individuals can access applicable tax treaty provisions.

A Certificate of Compliance or “Sailing Permit” must be requested from the IRS to demonstrate compliance with the tax law and verify that all required taxes have been paid before leaving the U.S.

F-1, F-2, J-1, H-2, H-3 and H-4 visa holders are not required to obtain a Certificate of Compliance if they had no U.S. source income other than:

  • Allowances or payments to cover study expenses (including travel, room, board, and tuition)
  • Employment income from authorized work, including practical training
  • Interest on bank deposits

All nonresidents for U.S. tax purposes with a visa status other than those noted above including permanent residents (green card holders), must obtain a Certificate of Compliance from the IRS before leaving the U.S.

  • IRS Form 2063 – required if the foreign national owes no U.S. tax at the time of departure
  • IRS Form 1040-C (Instructions) – required if the foreign national owes U.S. tax at the time of departure
  • Form should be filed at least 14, but no more than 30 days before departure
  • More information is available in IRS Publication 519, U.S. Tax Guide for Aliens

All U.S.-sourced payments made to foreign companies or entities are subject to standard tax withholding rate of 30%, unless the IRS exemption or tax treaty benefit applies. See below examples of U.S. income sourcing rules for commonly seen income types:

Item of Income Factor Determining Source
Business service income Where services performed
Sale of inventory – purchased Where sold
Sale of inventory – produced Allocation
Rents Location of property
Royalties (patents, copyrights, software licensees, etc.) Where property is used

 

  • Submission of one of W-8 Certificates is required for the university to be able to properly document foreign status of the vendor. Please submit an appropriate W-8 form to the W-8/W-9 Dropbox.
  • Tax Treaties - Check IRS Publication 515 for available tax treaty benefits. Vendor may claim the tax treaty benefits, if applicable on IRS Form W-8BEN-E – Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities), ​Instructions. 

The student payment policy at Virginia Tech applies to all departments involved in processing payments to students. It provides detailed instructions for categorizing and managing these transactions to ensure compliance with institutional and regulatory requirements. The tax classifications for various payment types outlined below apply to U.S. citizens and residents. Specific guidelines for nonresidents for U.S. tax purposes are provided separately. [Link to appropriate procedures is forthcoming]

  • Financial Aid Office: Handles payments for enrolled students that are unrelated to services provided.
  • Payroll Office: Processes payments for employment services rendered, such as student wage or assistantships.
  • Accounts Payable Office: Manages payments for students during non-enrollment periods, as well as prizes for competitions open to the general public and human research subject payments.

Before processing a payment, departments must determine:

  1. The primary purpose of the payment.
  2. The student’s enrollment status at the time of payment.
  3. The student’s tax residency status (U.S. citizen, resident, or nonresident for U.S. tax purposes).

This process ensures that all student payments are handled in compliance with institutional guidelines and applicable tax laws.

The Payroll Unit at Virginia Tech oversees all tax matters related to processing salaries, wages, and special payments for university employees. Its responsibilities include managing payroll-related tax deposits and reporting, processing and filing W-2 forms, and ensuring compliance for payments to foreign national employees and vendors, including 1042-S reporting. Additionally, it handles income withholding orders, garnishments, and liens. The Payroll also manages the reporting of educational assistance, taxable gifts, non de minimis awards, athletic tickets, and travel reimbursements, ensuring accurate classification and compliance with tax regulations. 

Accounts Payable establishes guidelines for providing honorarium payments to individuals who offer short-term, voluntary, short-term contributions such as guest lectures, creative input, participation in seminars, workshops, or panels, and recognition for achievements in educational, research, or public service activities without expected deliverables. services to the university. These payments are tokens of appreciation and are not tied to any contractual obligations. Honorariums are not considered allowable payments to current university employees or students, for services with negotiated expectations, or activities requiring formal contracts. Please see additional guidance on handling honoraria.

Human subjects are individuals who contribute to research studies by providing data through direct interaction with researchers, such as interviews, surveys, or behavioral observations. Their participation is vital for advancing research, particularly in disciplines like psychology, social sciences, and education.
Human subjects are not compensated as employees because their participation falls outside the scope of their regular job responsibilities at the university. Departments requesting payments to human subject participants must complete the appropriate forms, based on the payment amount, to ensure accurate tracking and reporting. Since all human subject payments may be taxable to the recipient, tax reporting information must be collected and provided accordingly. Please see Procedure 23715c: Selecting and Paying Human Subject Participants for details. 

A department or unit needing to hire or reassign eligible employees to an international alternate work site must articulate a significant business need and the circumstances that prevent this work from being performed in the Commonwealth of Virginia. The following steps should be completed when an employee has a remote work location outside the Commonwealth of Virginia for more than 30 days:

  • Update the employee’s current mailing address and work location to reflect the current placement
  • Complete a Flexible Work Agreement to ensure supervisor and HR approval.
  • Departments seeking to reassign an existing employee to a state where the university is not registered should consult with the Division of Human Resources within a minimum of 60 calendar days prior to the start of the out-of-state work.
  • Contact Payroll to fill out tax forms for the state in which work is being completed
  • Administrative costs, including those related to tax registration and benefits compliance, will be charged to the hiring department.
  • Employees are responsible for promptly notifying their department of any changes to the approved work site location; failure to do so may lead to disciplinary action, up to and including termination of employment.

For more information, please see Payroll, HR website, and Policy No. 4325 Flexible Work Policy for more details.

Managing international work arrangements can be challenging, particularly when employees are based outside the United States. To ensure compliance with local laws and reduce risks, Virginia Tech provides flexible work solutions designed to meet these requirements. Please see HR website and Policy No. 4325 Flexible Work Policy for more details. The Payroll and Tax Compliance teams review and assess individual tax liabilities, payroll adjustments, and potential permanent establishment risks before finalizing international remote work arrangements. Understanding risks will help departments to facilitate smooth operations while mitigating legal and financial risks. The review and assessment are not required for:

  • Current employees whose jobs require business travel for up to 10 consecutive workdays outside the United States 
  • Employees on academic year contracts who do not receive additional summer compensation 
  • Employees on research or special leave.  

The request for the review should be submitted to payroll@vt.edu or via International Work Expression of Interest form [link forthcoming].

As a corporate agency of the Commonwealth of Virginia, the University is exempt from income tax under Section 115 of the Internal Revenue Code. However, this exemption applies only to activities that are substantially related to its nonprofit missions, including education, research and public service  If the University engages in trade or business activities unrelated to these exempt purposes, the net profit from such activities is classified as Unrelated Business Taxable Income (UBTI) under Section 513 of the Internal Revenue Code and is subject to Unrelated Business Income Tax (UBIT).

The Financial Reporting unit of the Controller's Office is responsible for identifying and reporting Unrelated Business Income Tax (UBIT) to ensure compliance with federal regulations. This includes analyzing university activities to determine whether they generate unrelated business income, calculating the associated tax liability, and filing the required tax returns. For more details, see IRS Publication 598, Tax on Unrelated Business Income of Exempt Organizations or contact the Controller’s Office at finrpt@vt.edu to discuss the matter.

Virginia’s Sales and Use tax does not apply to sales of tangible personal property to the Commonwealth of Virginia or to its political subdivisions, for their use or consumption, if the purchases are pursuant to required official purchase orders to be paid for out of public funds. The tax applies when such sales are made without the required purchase orders and are not paid for out of public funds. No exemption is provided for state or local government employee purchases of meals or lodging whether purchases are pursuant to required official purchase orders or not. The following examples are offered to show that taxes apply to lodging and conference facilities under a variety of circumstances:

The tax applies to the sale or charge or any room or rooms, lodgings or accommodations furnished to transients by any hotel, motel, inn, tourist cabin, camping grounds, club or other similar place. The tax applies to all sales of tangible personal property by such a business.

Any additional charges made in connection with the rental of a room or other lodging, or accommodation are deemed to be a part of the charge for the room and subject to tax. For example, additional charges for movies, local telephone calls and similar services are subject to the tax. Toll charges for long-distance telephone calls are not subject to the tax.

Retail sales of meals by restaurants, hotels, motels, clubs, caterers, cafes and others are paid in accordance with policies established by the Virginia Department of Tax Administration.

Virginia vendors may request that University purchasers provide an exemption certificate ST-12 before they agree to waive sales tax.

  • As of 2018, all major out-of-state vendors are required to collect sales tax. Consequently, non-Virginia vendors may request a Virginia certificate of exemption to confirm the University’s tax-exempt status.
  • Other States Tax Exemption Information [forthcoming]
  • The University is required to pay Virginia sales tax on in-person sales of physical goods occurring in Virginia, as well as on mail-order sales to destinations within Virginia.
  • Purchasers who are tax-exempt or governmental entities, or who are authorized resellers, may be exempt from sales tax. Before exempting a sale from tax, the selling unit is responsible for obtaining a sales exemption certificate from the purchaser valid in the jurisdiction in which the purchaser is located. If located in Virginia, the purchaser must provide the University with a copy of its Virginia Form ST-10 or ST-12 before a tax exemption can be granted.
  • Virginia imposes a 5.3% tax on sales in most jurisdictions (including Blacksburg) with a reduced 2.5% tax rate on the sale of personal hygiene and food items. For more detail on sales tax requirements and reporting, see the Controller’s Office Procedure 90100: Departmental Sales Tax or contact salestax@vt.edu. 

Virginia Tech must collect sales tax on all sales, leases, and rentals of tangible personal property within Virginia, unless a specific exemption applies. 

Departments must notify the Controller’s Office at salestax@vt.edu before initiating any activities where sales tax may apply. They are also required to establish a system to apply, collect, and deposit the appropriate sales tax into designated Banner account codes.

Departments that fail to notify the Controller’s Office in advance of new sales or changes in delivery methods are responsible for any associated taxes, penalties, and interest resulting from non-compliance. 

Yes, the university is not required to collect taxes on sales to another university department. However, for sales to external customers, taxes must be collected if the sale is taxable under the state law. If the customer claims the sale is exempt, the department must collect an exemption certificate from the customer. 

For in-state buyers in Virginia, sales tax is generally applied based on the seller's location (origin-based sourcing), not the buyer's address. This means the university should collect sales tax at the rate applicable to its own location when selling to buyers within Virginia. 

If goods are shipped outside the Commonwealth of Virginia, departments must inform the Controller’s Office, as this may create a sales tax liability in other jurisdictions. The Controller’s Office will assess whether sales tax collection is necessary based on university-wide data and will guide departments accordingly. 

If the university does not have nexus in the other state, it is generally not required to collect another state’s sales and use tax, and the buyer is responsible for paying use tax in their own state (some exceptions apply depending on the specific state laws). However, if the university has nexus in the other state – whether through physical presence, such as facilities or employees, or economic presence, such as exceeding sales or transaction thresholds – it is required to collect and remit sales tax in compliance with that state’s tax laws. Virginia sales tax applies if the out-of-state customer picks up the item at the university’s location. 

Yes, the university is not required to collect taxes on sales to another university department. However, for sales to external customers, taxes must be collected if the sale is taxable under the state law. If the customer claims the sale is exempt, the department must collect an exemption certificate from the customer. 

Virginia Tech qualifies for a retail sale and use tax exemption on purchases for institutional use, requiring the use of Form ST-12 at the time of purchase. It is the purchaser’s responsibility to notify the vendor of the tax-exempt status, as vendors are not obligated to issue refunds for sales tax after the transaction. 

For additional details, departments can refer to the following university policies:

  • University Related Business Activities – No. 3005
  • Funds Handling and Deposit of State and Local Funds – No. 3006
  • Sales, Solicitation, and Advertising on Campus – No. 5215

For further assistance, departments can contact the Controller's Office at salestax@vt.edu.

FAQs
Forms
Policies and Procedures
Trainings

Contact Information:

Salestax@vt.edu

Additional resources: