Which purchase is a dealer exempt from paying Virginia sales tax on?

A dealer in Virginia is exempt from paying sales tax on parts and accessories installed on inventory vehicles because these items are considered part of the dealer’s business operations aimed at preparing vehicles for resale. This exemption recognizes that the dealer is simply enhancing the products they intend to sell, thereby keeping the sales tax liability within the final sales price when the vehicle is ultimately sold to consumers.

In contrast, test vehicles for demonstrations are generally not exempt because they are used for promotional purposes rather than for resale. Fuel for dealership operations and office supplies are typically subject to sales tax as they do not directly contribute to the resale of vehicles but are rather operational expenses. Therefore, the exemption for parts and accessories focuses on materials directly linked to selling vehicles, as opposed to general supplies or operational costs of the dealership.