Roxy operates a dress shop in Arlington, Virginia. Roxy also ships dresses nationwide upon request. Roxy's Virginia sales are $1,900,000 and out-of-state sales are $218,000. Assuming that Virginia's sales tax rate is 5 percent, what is Roxy's Virginia sales and use tax collection obligation?

Question

Quizplus · Accepted Answer

Roxy's Virginia sales tax collection obligation is 5% of her $1,900,000 Virginia sales, which equals $95,000. However, since Roxy also ships dresses nationwide upon request, she is also responsible for collecting and remitting use tax on out-of-state sales. Use tax is a tax on goods purchased for use, storage, or consumption in a state on which no sales tax was collected. Therefore, Roxy's use tax collection obligation for out-of-state sales of $218,000 would also be 5% of $218,000, which equals $10,900. Therefore, Roxy's total sales and use tax collection obligation is $95,000 + $10,900 = $105,900. The correct answer is option D.

Roxy Operates a Dress Shop in Arlington, Virginia