Resources for Retailers

Beginning on July 1, 2022, certain Loudoun County businesses must collect a tax of five cents ($0.05) for each disposable plastic bag provided to customers, whether or not those bags are provided free of charge.

To compensate for the cost of collecting, accounting for, and remitting the tax, retailers are permitted to keep a portion of the tax collected, accounting for the discount in the form of a deduction when submitting their tax return.

The amount of the discount decreases over time as follows:

• Until January 1, 2023, dealers are allowed to retain two cents ($0.02) from the tax collected on each disposable plastic bag.
• Beginning January 1, 2023, dealers are allowed to retain one cent ($0.01) from the tax collected on each disposable plastic bag.

The tax must be collected by Loudoun County grocery stores, convenience stores and drugstores from customers who make in-store purchases, to-go purchases, delivery purchases, and curbside pick-up purchases from their establishments. The guidelines for the ordinance defines these terms as:

• Grocery store – an establishment that has an enclosed room in a permanent structure and that sells food and other items intended for human consumption, including a variety of ingredients commonly used in the preparation of meals (does not include food banks, farmers markets, or mobile food units).
• Drugstore – an establishment that sells medicines prepared by a licensed pharmacist pursuant to prescription and other medicines and items for home and general use.
• Convenience store – an establishment that (i) has an enclosed room in a permanent structure where stock is displayed and offered for sale and (ii) maintains an inventory of edible items intended for human consumption consisting of a variety of such items of the types normally sold in grocery stores.

The tax applies in cases of large retail establishments that contain a grocery store, a convenience store, or a drugstore. The tax applies to only those grocery stores, convenience stores, and drugstores that maintain regular business hours at a fixed place of business in the County.

The tax does not apply to restaurants, food banks, farmers markets, or clothing stores nor does it apply to plastic bags used to package meat, poultry, or bulk food items which are packaged as such to avoid damage or contamination.

Yes, the Board’s adoption of this tax applies countywide.

Disposable plastic bags subject to the tax include any plastic bag provided by a grocery store, convenience store, or drugstore to a customer at the point of purchase to transport items purchased and not intended for reuse. Such bags are taxed whether or not they are provided free of charge.

The tax does not apply to the following items:

• Durable plastic bags, with handles, that are specifically designed and manufactured for multiple reuse and that are at least four mils thick;
• Plastic bags that are solely used to wrap, contain, or package ice cream, meat, fish, poultry, produce, unwrapped bulk food items, or perishable food items in order to avoid damage or contamination;
• Plastic bags used to carry dry cleaning or prescription drugs; or
• Multiple plastic bags sold in packages and intended for use as garbage, pet waste, or leaf removal bags.

Similar to sales tax, the Virginia Department of Taxation will administer, enforce, and collect disposable plastic bag tax revenues on behalf of the County. Impacted businesses will report the number of disposable plastic bags and amount of tax to Virginia Tax. The return must be filed and the tax paid on or before the twentieth day of each month for the period ending the previous month.

Keep in mind that a dealer discount will apply. For example, a retailer reports 200 taxable disposable plastic bags provided to customers in the month of July 2022. For the return filed August 20, 2022, the total tax collected should be $10.00 (200 x $.05 = $10.00) for the month. The retailer should report this amount on the return and remit $6.00 (200 x $.03 = $6.00) with the return and keep $4.00 (200 x $.02 = $4.00) as a dealer discount.

The dealer discount decreases over time. Businesses are allowed to retain two cents ($0.02) from the tax collected on each disposable plastic bag until January 1, 2023. Beginning on that date, businesses are allowed to retain one cent ($0.01) from the tax collected on each disposable plastic bag.

Revenues generated from the disposable plastic bag tax are restricted for specific uses, which include: environmental cleanup, providing education programs designed to reduce environmental waste, mitigating pollution and litter, or providing reusable bags to recipients of Supplemental Nutrition Assistance Program or Women, Infants, and Children Program benefits.

If you have specific questions regarding the collection of this tax please contact the Virginia Department of Taxation at (804)-367-8031.