Is a processing fee subject to sales and use tax?

A processing fee is considered subject to sales and use tax because it is typically regarded as a charge for a service that is provided to the customer. In many jurisdictions, including Virginia, such fees are treated similarly to other taxable sales when they are charged in connection with the sale of tangible personal property or certain services.

When a dealer collects a processing fee as part of a sale, it reflects an additional amount that is part of the total consideration for the goods or services being sold. Since Virginia's tax regulations stipulate that charges related to the sale of taxable items are generally subject to sales tax, this means that the processing fee is included in the taxable base.

This understanding aligns with the principle that any amount charged for services that are closely tied to the sale of a taxable item will also attract the same tax implications, ensuring comprehensive compliance with the tax code. Therefore, considering these factors, the processing fee must be viewed as subject to sales and use tax.