Virginia State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Virginia, with full citations and the original source on every page.
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Could taxpayers avoid Virginia's three-year refund deadline by carrying a late-claimed overpayment forward as a credit?
No. Virginia applies the same three-year limitation to refunds and overpayment credits. The Department had no record of the 2011 return before January 2016, and a signed April 2012 copy plus preparer …
Could this couple deduct carried-forward Virginia 529 contributions and subtract gain from publicly traded Virginia-company stock?
Virginia allowed the 529 deductions because records showed unused contributions from two contracts remained available for 2012 and 2013. It denied the capital-gain subtraction because the publicly tra…
Could a taxpayer use the federal claim-of-right method on his 2015 Virginia return after repaying income reported in 2014?
Yes. Virginia follows an individual's federal IRC § 1341 election. The taxpayer claimed the credit in the repayment year, attached the Virginia and federal computation schedules, and reported the bene…
Did the husband's unemployment after military retirement mean this Virginia couple did not have to file a 2012 resident return?
No. The husband received more than $50,000 of retirement income, the wife had wage income, and unemployment compensation was taxable. The couple had to file a Virginia resident return and received 30 …
Did gain from a qualified Virginia technology company's sale of internet domain names qualify for the capital-gain subtraction?
No. Even if the LLC was a qualified technology business and the gain was long-term, the subtraction applied to gain from the taxpayer's equity or subordinated-debt investment in the business. Internet…
Was a federal Civil Service Retirement System annuity exempt from Virginia income tax like Social Security benefits?
No. Virginia's subtraction covered Social Security and benefits included federally solely under IRC § 86, not CSRS annuities. Any CSRS amount included in federal adjusted gross income remained in Virg…
Could Virginia residents claim an other-state income-tax credit for New Hampshire's Business Enterprise and Business Profits Taxes?
No. The Business Enterprise Tax was based on business expenditures, and the Business Profits Tax was not a broad-based individual net-income tax. Neither was substantially similar to Virginia's indivi…
Did compensation in the New Hampshire Business Enterprise Tax base make it a qualifying income tax for Virginia's other-state credit?
No. The tax base included compensation, interest, and dividends paid or accrued, making it a tax on business expenditures rather than a broad-based individual income tax substantially similar to Virgi…
Did new evidence show that a taxpayer who moved to Virginia in late October 2012 was only a part-year resident?
Yes. New documentation showed that the taxpayer left his job and prior-state domicile and moved to Virginia in late October 2012. Virginia treated him as a part-year resident, requested Form 760PY wit…
Could a merchant mariner exclude 2012 wages from Virginia tax without proving domicile in another state?
No. Working outside Virginia did not establish a new domicile. The husband retained a Virginia home with his wife, vehicles, a driver's license, and other ties, and provided no evidence of permanent d…
Could a taxpayer challenge Virginia's 2008 and 2012 income-tax assessments after the 90-day administrative appeal periods expired?
No. The 2008 and 2012 assessments were issued in April 2011 and August 2013, making the appeal deadlines July 2011 and November 2013. The taxpayer did not appeal until February 2015, so Virginia could…
Did frequent moves and uncertain startup employment prove that this taxpayer established permanent domicile outside Virginia in 2012?
No. The taxpayer described his startup job and residence in another state as uncertain, moved frequently, used a Virginia address on his federal return, retained and renewed a Virginia license, and ke…
Did Virginia tax wages earned during a roughly 150-day Virginia work stay by a West Virginia domiciliary resident?
No. The taxpayer established West Virginia domicile and stayed in Virginia for only about 150 days, below the actual-resident threshold. Virginia's reciprocal agreement exempted her Virginia wages as …
Would Virginia abate tax when a taxpayer reasonably relied on incorrect written Department advice about a death-benefit subtraction?
Yes. Although the taxpayer was not eligible for the subtraction on the stated facts, an authorized Department representative had approved it in writing. Virginia abated the 2012 assessment because tha…
Could Virginia's other-state tax credit use a pass-through entity's full distributive income when the other state taxed a smaller amount?
No. The credit calculation could include only the pass-through income actually taxed by the other state after its conformity modification. Virginia therefore upheld the reduced credit and assessment.
Could a taxpayer overturn Virginia's 2012 nonfiler assessment without evidence that he was not a Virginia resident?
No. Virginia could use IRS information and estimate the liability when no return was filed. Because the taxpayer produced no objective evidence that he was not a Virginia resident required to file for…
Did a taxpayer abandon her Virginia domicile when she moved to another state for employment in 2012?
Yes. Even assuming she had established Virginia domicile earlier, her move for employment, new permanent home, and other evidence showed that she abandoned it in 2012. Virginia abated the assessment.
Could Virginia recover a refund after the taxpayer filed a second return showing fewer deductions and more tax due?
Yes. Virginia treated the second return as an amended return. Because it showed higher liability after a refund had already been issued, the excess refund became an underpayment that the Department co…
Was a husband a Virginia domiciliary resident in 2011 when the couple claimed he remained domiciled elsewhere?
Yes. The evidence tied the husband to the couple's Virginia home, while the couple provided no proof that he maintained or acquired domicile elsewhere. He had to file as a Virginia resident for 2011.
Could Virginia residents claim an out-of-state income-tax credit for New York's Metropolitan Commuter Transportation Mobility Tax?
No. Virginia found that the New York MCTMT was a targeted payroll and self-employment tax, not a tax substantially similar to Virginia's broad individual income tax. Denying the credit also did not vi…
Could taxpayers defeat a Virginia assessment merely by saying they had submitted documents disputing the IRS adjustment?
No. Virginia used the IRS's final adjustment after the taxpayers failed to report it on an amended state return. The Department would not reexamine the federal result, and the taxpayers did not show t…
Could Virginia residents claim a credit based on all Arkansas tax paid instead of the Arkansas income actually subject to tax?
No. Virginia applied Arkansas's nonresident allocation percentage to determine the income actually taxed there, then limited the credit to the Virginia tax on that income. The assessment was upheld.
Could Virginia residents claim a Virginia credit for Maryland tax on commuting wages and have assessment interest waived?
No. Virginia-Maryland reciprocity meant the Virginia residents were not liable for Maryland tax on their commuting wages, so no Virginia credit was allowed. They had to seek any Maryland refund from M…
Could a taxpayer overturn a Virginia residency assessment without providing the domicile records the Department requested?
Not on the existing record. The assessment was presumed correct, and the taxpayer had not supplied the requested domicile evidence. Virginia allowed one final 45-day opportunity to provide documentati…
When did a couple become Virginia residents for taxing a 2012 IRA distribution?
They became Virginia domiciliaries when they closed on their Virginia home in September 2012. Because the IRA distribution came in November, it was attributable to their Virginia-resident period and h…
Did taking a visiting-professor job in another state end a taxpayer's Virginia domicile?
No. The taxpayer showed employment in another state but did not prove a permanent home or other domicile ties there, while retaining a Virginia license, vehicle registrations, and mailing address. Vir…
Did the Servicemembers Civil Relief Act exempt a military spouse's income when the couple did not prove a shared out-of-state domicile?
Not on the record provided. The couple did not prove that both spouses shared the claimed out-of-state domicile or avoided Virginia domicile. Virginia gave them 30 days to provide complete records or …
Did military-spouse status exempt a taxpayer who had established Virginia domicile before the federal protection changed?
No. The taxpayer's pre-2009 resident returns, Virginia home and employment, and 2009 Virginia driver's license supported Virginia domicile. She supplied no documentation proving a shared out-of-state …
Was gain from an out-of-state property sale excluded when the taxpayers had already bought a Virginia home and reported moving before the sale?
No. The taxpayers did not prove that their Virginia domicile began after the September 24, 2012 sale. Their August home purchase, time spent in Virginia, vehicle record stating a September 17 move, la…
Could a service member claim Virginia's National Guard pay subtraction without proof of Virginia Guard service?
Not on the existing record. The subtraction applied only to qualifying service in the Virginia National Guard, while the W-2 suggested Department of Defense reserve service. Virginia allowed 30 days t…
Did a retiree living in Virginia for more than 183 days owe Virginia tax on New York retirement income?
Yes. The retiree took steps to abandon New York and establish Virginia domicile, and she also lived in Virginia for more than 183 days. Virginia could tax her retirement income, subject to a possible …
Did renting a District of Columbia apartment establish a new domicile outside Virginia for 2012?
No. Renting a D.C. apartment and later registering to vote there did not prove a permanent D.C. domicile, especially without evidence of a D.C. tax filing and amid an overseas move followed by a retur…
Could Virginia recover a refund after a second return reported higher federal adjusted gross income?
Yes. Virginia properly issued the first refund from the original return, but the second return increased federal adjusted gross income and tax liability. The earlier refund then became an erroneous re…
When did a family that moved for work, schools, and a home purchase become Virginia residents?
Their Virginia residency began in September 2012. By then the husband had permanent Virginia work, the children attended Virginia schools, and the family was staying in Virginia before buying a home. …
Could a taxpayer overturn a Virginia assessment merely by denying residence and Virginia-source income?
No. The taxpayer supplied no objective evidence supporting his denial of Virginia residence or Virginia-source income. Virginia allowed one final 30-day opportunity to provide domicile records or file…
Was an out-of-state driver's license alone enough to overturn a Virginia residency assessment?
No. An out-of-state driver's license was only one domicile factor, and the taxpayer did not answer Virginia's request for the rest of the evidence. Virginia allowed 30 days for adequate documentation …
Could a Virginia resident report zero income when S-corporation and IRS records showed pass-through and business income?
No. The S corporation filed returns, maintained Virginia employees, and reported pass-through income, while IRS records showed additional business income. Without objective corrected federal income ev…
Could a Virginia resident postpone filing until a federal return reporting a casualty loss was completed?
No. Virginia filing duties were established by Virginia law, not by when the taxpayer chose to file a federal return reporting a casualty loss. Because no Virginia return was filed, the Department cou…
Could a taxpayer prove foreign domicile for 2010 and 2011 without answering Virginia's document request?
Not on the existing record. The taxpayer had filed Virginia resident returns for 2005 and 2006 and supplied no documents supporting foreign domicile for 2010 and 2011. Virginia allowed 30 days for ade…
Could a taxpayer reduce a 2012 Virginia assessment by saying she moved to Virginia in August and earned all income elsewhere?
Not without supporting records. The taxpayer acknowledged Virginia's request but did not provide enough evidence to determine her domicile or correct 2012 liability. Virginia upheld the estimate while…
Could a taxpayer establish an out-of-state move during 2012 without providing the residency and filing records Virginia requested?
No, not on the existing record. The taxpayer said she lived in another state from August 2011 until November 2012 but provided no objective residency or filing evidence. Virginia allowed 30 days for d…
Was a lump-sum pension taxable when received after signing an out-of-state home contract but before closing and moving?
Yes. Signing a purchase contract showed intent but did not create the physical presence required for a new domicile. The couple remained Virginia residents until the February 29 closing, so the pensio…
Could a taxpayer keep lower Virginia FAGI when IRS records showed omitted wages and cancellation-of-debt income?
No. IRS information showed wages on Form W-2 and cancellation-of-debt income on Form 1099-C that were omitted from the Virginia return. Without objective contrary evidence, Virginia adjusted federal a…
Could a copy of a Virginia return overturn an assessment when IRS records showed much higher federal adjusted gross income?
Not by itself. IRS data showed significantly higher federal adjusted gross income than the return copy, and the taxpayer did not supply the requested official federal transcript. Virginia allowed 30 d…
Did living and working in another state for 2012 end Virginia domicile when the taxpayer kept a Virginia license and voter registration?
No. The taxpayer lived and worked elsewhere and registered a vehicle there, but kept her Virginia driver's license and voter registration and returned in 2013. Virginia found no permanent abandonment …
Could a partner support Virginia credits for taxes paid through state composite returns with a per-state allocation schedule?
Yes. The schedule separately listed the partner's share of taxable income and tax paid for each state, satisfying Virginia's composite-return documentation rule. Virginia also confirmed the relevant A…
Did a former Virginia resident owe 2014 Virginia tax on out-of-state wages and an early retirement withdrawal from a Virginia business?
No. She had established a home and employment in another state and was neither a Virginia domiciliary nor actual resident. Her out-of-state wages and retirement withdrawal were not Virginia-source inc…
How did Virginia treat gain from a dairy farmer's sale of milk-production quota, or milk base?
Federal law determines the amount and character of any gain case by case. Income included in federal adjusted gross income or federal taxable income flows into Virginia tax. The qualified-business cap…
Does Virginia's three-year refund limitation also apply when an individual elects an overpayment credit?
Yes. Virginia treated a refund and an elected overpayment credit as functionally equivalent under Va. Code § 58.1-499. Because the 2011 return was filed in June 2015, after the May 1 deadline, the cre…
Could gain from selling a small parcel to a Virginia public university qualify for a capital-gain or open-space subtraction?
No. The real estate was not an investment in a qualified technology business, and the roughly 5,000-square-foot parcel did not meet Virginia's minimum open-space acreage standards. The individual inco…
Was a retiree with no claimed permanent home still a Virginia domiciliary resident for 2012?
Yes. Although he spent about 120 days in Virginia and moved among several states, he used a Virginia family address for mail and his federal return and held a Virginia driver's license. With no eviden…
Could a Virginia resident exclude wages by treating the value of personal labor as an offsetting cost?
No. A worker's labor did not create a tax basis that offset wages, and courts had rejected the argument that wages are not income. Because the taxpayer's Virginia income exceeded the filing threshold,…
Did a foreign service officer become a Virginia domiciliary resident before an overseas assignment?
No. His continuing driver's license and voter registration showed that he had not abandoned his original state's domicile, so Virginia abated the resident assessment. But his Virginia employment wages…
Was an October 2015 refund claim timely for Virginia income-tax assessments issued in 2005?
No. The submitted 2001 and 2003 returns did not show changes and arrived more than two years after assessment payments. The assessments were also not paid and the protective claim was not filed within…
Could a taxpayer limit Virginia's 2012 assessment by saying he moved to Virginia in October without supplying residency records?
Not yet. The taxpayer conceded tax on a post-move IRA distribution but did not provide the other-state return or domicile records Virginia requested. The assessment remained presumptively correct, wit…
Was a researcher a Virginia domiciliary despite claiming fewer than 90 Virginia days and residence elsewhere?
Yes. The researcher kept a Virginia apartment and vehicle, held a Virginia driver's license, and used a Virginia address on his 2011 federal return. Later out-of-state records and an unsigned lease di…
Did an out-of-state consultant owe Virginia income tax when he worked 105 days at a Virginia client's headquarters?
Yes, to the extent his pay came from services performed in Virginia. Working from an out-of-state home office did not erase the 105 days spent at the Virginia client's headquarters. Virginia required …
Was a military spouse protected from Virginia tax when he claimed the service member's domicile but had never been physically present in that state?
No for the husband. The service member remained domiciled in the other state, but her husband had never lived there and therefore could not have acquired that domicile. His Virginia home, employment, …
Which medical, charitable, home-office, travel, meal, and LLC deductions survived Virginia's review of a 2014 return?
Documented medical costs could count if they cleared the 2014 federal floor, and the church contribution was substantiated. Pre-tax health premiums, life insurance, and the husband's personal claim of…
Was a Virginia resident entitled to larger credits for New York income tax on his 2012 and 2014 Virginia returns?
No for 2014, and Virginia could not decide 2012. The 2014 credit was properly limited using Virginia's established New York nonresident-income calculation, so the refund was denied. For 2012, there wa…
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These are official tax letter rulings and advisory opinions issued by Virginia's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.