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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Did a business owner prove that a city's BPOL and BTPP assessments were wrong based on separate businesses, contracting, out-of-state work, and property value?
Only in part. The taxpayer did not document separate businesses, contractor work, excluded insurance proceeds, or eligibility for an out-of-state BPOL deduction, so the BPOL assessments were upheld. T…
How did Virginia classify and situs an engineering-services company's BPOL receipts, and could it appeal a vehicle BTPP assessment?
Virginia found the company was a business-service provider, not a contractor, for 2009-2010 and ordered a classification-based refund. It remanded 2011-2012 classification and situs for records, denie…
Would the Virginia Department order a county to issue a machinery-and-tools-tax refund after two prior determinations?
No. The Department said it had fulfilled its duties by issuing a final determination and a reconsideration determination, and it would not direct how the county implemented them. If the county's inact…
Did a technical-services company prove that its 2010 BPOL receipts belonged outside the city, and was interest due on later refunds?
Only in part. The taxpayer had not yet proved that its 2010 service receipts should be sitused outside the city, so that issue was remanded for 30 days of evidence. The city nevertheless had to pay st…
Must a nonprofit Virginia hospital have a religious affiliation for its property to qualify for the hospital-and-charity tax exemption?
No. Religious affiliation was not a requirement under the authorities discussed. The hospital still had to satisfy three factual conditions, including exclusive hospital use and operation exclusively …
Was a home-based worker paid by a foreign company operating a licensable Virginia business rather than working as an employee?
Yes. Form 1099 treatment, Schedule C business income and expenses, a home-office deduction, and 40-hour weekly work from the home or field supported independent-business status. The county's 2006-2011…
Were cable-television converter boxes subject to a Virginia city's business tangible personal property tax?
No. Virginia classified the cable converter boxes as intangible property under Va. Code § 58.1-1101 A 2a, so the city could not impose business tangible personal property tax on them. The case was rem…
What Virginia tax interest rates applied during the first quarter of 2015?
Virginia's first-quarter 2015 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying disputed assessments after the nine-month point was 0%, while the corresp…
Were cable-television converter boxes subject to a Virginia city's 2013 business tangible personal property tax?
No. Virginia held that cable converter boxes were property used in a cable television business and that the 1984 statutory change classified them as intangible property. The case was remanded to the c…
What Virginia tax interest rates applied during the fourth quarter of 2014?
Virginia's fourth-quarter 2014 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying disputed assessments after the nine-month point was 0%, while the corres…
Did an economic-obsolescence appraisal prove that a county's percentage-of-original-cost machinery valuation exceeded fair market value?
No. The county uniformly used a statutory percentage-of-original-capitalized-cost method and thoroughly considered the appraisal. The appraisal did not adequately support its economic-obsolescence and…
Were dollar-for-dollar warehouse operating-expense reimbursements excluded from BPOL gross receipts as agency funds or loan repayments?
No. The reimbursements were part of the operator's cost-plus warehouse-management receipts. The operator lacked stated client-vendor contracts and segregated accounting required to show agency, and th…
Could a manufacturer force machinery revaluation using depreciation schedules while refusing the county's requested federal and Virginia returns?
Not yet. The county could require complete tax returns and schedules to verify original capitalized cost, and the manufacturer's depreciation schedules were insufficient. Virginia found the denial pro…
What Virginia state and local tax legislation did the Department summarize for the 2014 General Assembly and Special Session I?
This Department guide summarizes state and local tax legislation enacted during Virginia's 2014 General Assembly and Special Session I through July 1, 2014. It covers administration, income tax, tobac…
Was a common carrier created after the Interstate Commerce Commission was abolished exempt from Virginia local BPOL tax merely because it registered with the FMCSA?
No. Under the statute as written in 2014, the carrier had to have been formerly certified by the Interstate Commerce Commission or meet the specified Surface Transportation Board registration language…
Did exterior light-box signs installed by a tenant become real-property fixtures rather than property subject to Virginia local BTPP tax?
No. Virginia upheld the county's classification of the entire light-box signage as taxable business tangible personal property. Although attached to the building, the boxes were not essential to the d…
What Virginia tax interest rates applied during the third quarter of 2014?
Virginia's third-quarter 2014 rate was 5% for both tax underpayments and overpayments. The reduced rate for a qualifying assessment still unresolved nine months after assessment was 0%. The bulletin a…
Were cable converter boxes issued to customers exempt intangible property rather than assets subject to local Virginia BTPP tax?
Yes. Virginia's 1984 legislative history expressly reclassified cable tuners and converters as intangible property. The Department rejected the city's machine classification and returned the case for …
Were cable converter boxes issued to customers exempt intangible property rather than assets subject to local Virginia BTPP tax?
Yes. Converter boxes were used in the cable-television business and Virginia's 1984 legislative history expressly reclassified tuners and converters as intangible property. The Department returned the…
When did purchased idle manufacturing equipment become taxable machinery and tools, and which owner's cost controlled its valuation?
Altered machinery was subject to M&T tax when it was necessary and actually used in the buyer's manufacturing process. Equipment bought in April 2012 but not operational until February 2013 was treate…
Were permanently installed gas pumps fixtures to real estate or business tangible personal property subject to a Virginia city's BTPP tax?
They were fixtures to real estate, not taxable BTPP. The pumps were connected to the station's electrical wiring and underground tanks, were essential to the site's use as a gas station, and were inte…
What Virginia tax interest rates applied during the second quarter of 2014?
Virginia's second-quarter 2014 rates were 5% for tax underpayments and assessments and 5% for tax overpayments and refunds. The reduced rate for qualifying assessments under administrative appeal was …
Could a Virginia locality deny the BPOL out-of-state deduction merely because the contractor used payroll apportionment to situs receipts?
No. A government contractor using payroll apportionment could still deduct the portion of Virginia-sitused receipts attributable to business in states or countries where it owed an income or income-li…
Could a government contractor recover BPOL tax and claim a current deduction for out-of-state receipts when it used payroll situs?
Yes. Virginia held that payroll apportionment did not eliminate the deduction for qualifying business where the contractor owed income-based tax. It remanded the 2008-2011 refund claims and 2012 deduc…
Could a business-service provider using payroll situs claim BPOL deductions and refunds for qualifying out-of-state receipts?
Yes. Payroll apportionment did not bar the out-of-state deduction. Virginia remanded the 2008-2012 refund and assessment dispute so the county could identify qualifying receipts from states where the …
Was a business that bought replacement parts and resold them to mining companies a BPOL wholesaler rather than a retailer or service provider?
Yes. The business took title to replacement parts, paid vendors, and resold the parts to mining companies that incorporated them into industrial processing operations. Virginia treated those sales as …
Did Virginia's Taxpayer Bill of Rights automatically apply to audits and assessments of taxes administered by cities and counties?
No. The Taxpayer Bill of Rights protected processes administered by the Virginia Department of Taxation, not taxes that local officials administer, such as real estate, tangible personal property, and…
Could a business that bought homes, hired contractors to renovate them, and resold them be classified as a BPOL contractor?
Yes, potentially. Virginia's BPOL rules included a person who regularly engaged others to perform construction work and a business improving its own real estate for resale. The county had to decide th…
What Virginia tax interest rates applied during the first quarter of 2014?
Virginia's first-quarter 2014 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments under administrative appeal was 0%. The corresponding federal…
Was a Section 501(c)(3) research nonprofit exempt from Virginia local BPOL tax?
Yes. Because the organization was recognized under Section 501(c)(3), qualified under the cited charitable-nonprofit rule, and reported no unrelated business taxable income, Virginia concluded that al…
How could Virginia BPOL tax apply to recreation-center events, lodging packages, and sales by a nonprofit?
BPOL treatment depended on the activity. A developer's race fees were taxable gross receipts unless it proved a genuine agency relationship with the nonprofit; temporary vendors could face an itineran…
Was a hospital-owned nonprofit laundry cooperative exempt from city BPOL and business-property taxes?
No. The cooperative was a separate legal entity with its own employees, management, laundry operations, charges, and economic benefit to its hospital owners. It did not qualify as an IRC § 501 nonprof…
What Virginia tax interest rates applied during the fourth quarter of 2013?
Virginia's fourth-quarter 2013 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after the statutory nine-…
Could a manufacturer reduce 2008-2010 local machinery-and-tools tax for equipment it said was disposed of or idle after a foundry closure?
Only partly. The 2008 amended return was filed after the statutory deadline and remained barred. For 2009 and 2010, however, Virginia found that the manufacturer might have enough evidence to show tha…
What major Virginia state and local tax changes did the Department of Taxation identify in its 2013 Legislative Summary?
Virginia's 2013 Legislative Summary was a broad historical reference guide, not a taxpayer ruling. Major changes included electronic employer-withholding filing, IRC conformity through January 2, 2013…
Were a commercial printer's mailing-list, campaign, and mail-preparation functions a separate BPOL-taxable service business?
No. Nearly every mailing-services customer also bought a printed product from the taxpayer, and combining the services made the printing business more convenient and attractive. The mailing functions …
What Virginia tax interest rates applied during the third quarter of 2013?
Virginia's third-quarter 2013 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after the statutory nine-m…
Could a convenience store overturn local BPOL and business-property assessments without producing complete records?
No. The store repeatedly failed to supply complete cash-register tapes and other records needed to reconcile BPOL gross receipts, and it supplied no contracts proving vendors owned assessed display ca…
Which drink-packaging and bar-coding equipment counted as taxable manufacturing machinery rather than exempt logistics equipment?
Equipment forming the retail package counted as manufacturing; later shipping and logistics equipment did not. Six-packs for Drink Mix 1 and ten-packs for Drink Mix 2 met consumer product standards an…
What Virginia tax interest rates applied during the second quarter of 2013?
Virginia's second-quarter 2013 rates remained 5% for tax underpayments and 5% for overpayments. The reduced rate for a qualifying assessment under administrative appeal was 0% after nine months until …
Who owed Virginia local machinery-and-tools tax when idle recycling equipment was sold and returned to use midyear?
The buyer owed machinery-and-tools tax for the year because it owned the previously idle equipment and returned it to service in July; the equipment was taxable as though in use on tax day. The county…
For Virginia machinery-and-tools tax, whose cost is the 'original total capitalized cost' after used equipment is purchased?
The original total capitalized cost is the amount capitalized by the owner that first bought the machinery new, not a later purchaser's lower acquisition cost. A locality must consider a bona fide ind…
Did a manufacturer's utilization study require a city to reduce machinery-and-tools values for economic obsolescence?
No. The city's depreciated-cost method complied with Va. Code § 58.1-3507(B), and the taxpayer's utilization-based economic-obsolescence analysis alone was not a bona fide independent appraisal. Virgi…
What Virginia tax interest rates applied during the first quarter of 2013?
For January 1 through March 31, 2013, Virginia's tax underpayment and overpayment rates remained 5%. The reduced rate for a qualifying disputed assessment after nine months without a Department determ…
Could a city impose consumer utility tax on natural gas used by a combined-cycle power plant, and did the gas supplier qualify as a pipeline distribution company?
Yes. The plant used natural gas to run combustion turbines and captured their heat to make steam for another turbine, so the gas was used to furnish heat. The supplier qualified as a pipeline distribu…
What Virginia tax interest rates applied during the fourth quarter of 2012?
Virginia's fourth-quarter 2012 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after the statutory nine-…
What major Virginia state and local tax legislation did the Department of Taxation identify in its 2012 Legislative Summary?
This historical Department guide summarized state and local tax legislation enacted through the May 14, 2012 reconvened session. Major state changes included mandatory electronic corporate and sales-t…
How should a Virginia locality calculate the BPOL out-of-state gross-receipts deduction when receipts are sitused by payroll apportionment?
The county's excess-only method was wrong. When payroll apportionment assigns receipts to the Virginia definite place of business, the taxpayer first identifies Virginia employees' interstate particip…
How should a city calculate the BPOL out-of-state gross-receipts deduction when receipts are sitused by payroll apportionment?
The city's excess-only method was wrong. When payroll apportionment assigns receipts to the Virginia definite place of business, the taxpayer first identifies Virginia employees' interstate participat…
What Virginia tax interest rates applied during the third quarter of 2012?
Virginia's third-quarter 2012 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after the statutory nine-m…
Could a country club exclude member payments collected for pro shops, golf associations, and an employee fund from BPOL gross receipts as pass-through money?
Not on the evidence provided. Although the club kept separate accounts for payments collected for pro shops, golf associations, and an employee appreciation fund, it did not substantiate the required …
Was a multistate commercial printer a manufacturer for Virginia local BPOL and business-property taxes?
Yes. Virginia considered the printer's facilities as one business rather than isolating the county's direct-mail location. Its printing transformed raw materials and its manufacturing operations were …
Could a city use a vehicle pricing guide to value taxicabs for local business-property tax?
Yes, if the method is uniform within the taxicab class and reasonably estimates fair market value. Virginia found the city's guide-based method facially acceptable and said using a different method fr…
For BPOL tax, could a gas producer remove value added after gas entered transit at the county wellhead?
Yes. Because the gas was placed in transit at the county wellhead for sale elsewhere, BPOL gross receipts had to reflect fair market value at that point, not later value added before sale. Sale procee…
Did certification as a pollution-control facility exempt a Virginia landfill business from city BPOL tax?
No. Virginia held that Va. Code § 58.1-3660 exempts certified pollution-control real and tangible personal property from local property tax; it does not exempt the privilege of operating a business fr…
What Virginia tax interest rates applied during the second quarter of 2012?
Virginia's second-quarter 2012 rates were 5% for tax underpayments and 5% for overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after nine months until the D…
What Virginia tax interest rates applied during the first quarter of 2012?
Virginia's first-quarter 2012 rates were 5% for tax underpayments and 5% for overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after nine months until the De…
Was an unused railroad line still operating property for Virginia local property tax before formal abandonment?
Yes. Although the line was unused and parts were paved over, the railroad retained an easement allowing freight service and did not permanently withdraw the property until its September 2010 abandonme…
Were furnished corporate apartments a county definite place of business with rental receipts sitused there for BPOL tax?
Yes. The provider leased apartments from owners and sublet them directly to client occupants under its own agreements. Furnishings, utilities, housekeeping, and other amenities did not change the esse…
What Virginia tax interest rates applied during the fourth quarter of 2011?
Virginia's fourth-quarter 2011 rates were 5% for tax underpayments and 5% for overpayments, reflecting 3% corresponding federal rates plus two percentage points. For estimated-tax additions, June 30 y…
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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.