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 contractor's previously denied real-estate construction contracts appear eligible for Virginia's refund of the 0.3% state sales-tax increase that took effect July 1, 2013?
Potentially yes. The Commissioner found that the contracts submitted on appeal appeared dated before April 3, 2013 and bona fide, so the auditor had to review the contracts and invoices. Refund eligib…
Did vendor correspondence prove that software and maintenance were delivered only electronically and qualified for Virginia's exemption?
No. Later vendor correspondence identifying the purchase order did not satisfy Virginia's documentation rule. The invoice, contract, or sales agreement had to certify electronic delivery and that no t…
Could a contractor obtain a transitional sales-tax refund for purchases outside the three-year claim period?
No. The contractor filed its refund claim on November 30, 2016, so only purchases made in November 2013 or later were eligible. The Department found no applicable exception allowing a refund for earli…
Did a fencing contractor prove that cash withdrawals recorded as tools and materials were personal and not taxable purchases?
No. The contractor's ledger recorded the cash checks in small-tools and materials expense accounts, and the contractor supplied no invoices or other proof that the money was withdrawn for personal use…
Were a dental practice's implant purchases exempt because they were ordered for specific patients?
Only purchases proven to be for specific patients qualified. Shipping implants to a lab, buying from registered vendors, or handwriting a patient's name later did not by itself establish exemption or …
Was heat-resistant masking tape used in powder coating exempt manufacturing equipment, and could vendor-paid tax reduce a use-tax audit sample?
The masking tape was exempt because it was integral to powder coating and performed a quality-control function during production. But sales tax paid incorrectly to a vendor did not belong in a sample …
Did a Virginia auto repair shop owe tax on diagnostic and environmental charges and estimated underreported sales?
Yes. Diagnostic charges were taxable when connected with parts sales, environmental charges were taxable, and the shop did not disprove estimated underreported sales. Only separately charged repair la…
Is a Virginia seller and installer of water-flow instruments a retailer or a real property contractor?
Both, depending on the job. The firm was a contractor when installed instruments became part of real property and a retailer when they remained tangible personal property or were sold without installa…
Must a Virginia manufacturer collect sales tax on fiber posts sold in packs to dental practices?
Yes. The fiber posts were sold in packs for general dental use rather than bought on behalf of identified patients, so the manufacturer should collect Virginia sales tax from dental practices.
Are mowers and chain saws exempt when farmers use them to maintain the edges of crop fields?
No. Mowing field edges and trimming bordering trees were ancillary activities, not agricultural production for market, so the equipment was taxable. A dealer unsure of an exemption should charge tax a…
Who pays Virginia sales or use tax when countertops are fabricated and installed through retailers and contractors?
The fabricator-installer pays sales or use tax on its raw materials, and the retailer does not tax the homeowner's installed job. If the countertops are sold without installation, the retailer buys th…
Was an online restaurant-ordering platform a Virginia sales-tax dealer for food sold by independent restaurants?
No. The independent restaurants retained title and possession until customers received the food, so the platform was not the retail dealer. Because it collected tax for restaurants, it still had to do…
Were VoIP adaptors loaned to subscribers exempt as broadcasting or Internet-access equipment?
No. The VoIP provider was not a broadcaster, cable company, video programmer, or open video system and did not provide direct Internet access. Its adaptors required a separate third-party Internet con…
Is taxidermy a taxable fabrication service or an exempt personal service in Virginia?
Taxidermy was an exempt personal service because the customer's true object was the taxidermist's expertise, not incidental boards or glass eyes. The taxidermist still owed tax on consumed supplies, a…
Did placing digital projectors in theaters without charging for their possession create a taxable lease?
No. The theaters paid installation and setup fees but no consideration for possessing or using the projectors, so there was no taxable lease and the assessment was abated. The provider still owed use …
Did placing digital projectors in theaters without charging for their possession create a taxable lease?
No. The theaters paid installation and setup fees but no consideration for possessing or using the projectors, so there was no taxable lease and the assessment was abated. The provider still owed use …
Are lump-sum body-piercing and insertion charges taxable when they include jewelry, and could Virginia audit six years?
Piercing charges were exempt personal services because the included jewelry was incidental. Insertion fees could also be exempt if documented, but stand-alone jewelry remained taxable. The six-year no…
Which cable, internet, and telephone equipment was exempt or taxable, and how did Virginia allocate mixed-use purchases?
Virginia reached mixed results. It allowed bandwidth allocation for mixed-use equipment through 2015, required percentage-of-time allocation from 2016, exempted signal-leak testing devices used throug…
Could a cigarette wholesaler reduce a Virginia sales-tax assessment by supplying resale certificates and invoices after the audit?
Potentially. Virginia returned the audit to remove cigarette sales supported by valid Form ST-10 resale certificates and invoices, but late certificates received extra scrutiny because none were avail…
Did a retail printing-services business qualify for Virginia's industrial manufacturing exemption on print-production equipment?
Generally no. Virginia treated the business as a copy and reproduction service rather than an industrial custom printer, so its ordinary production equipment remained taxable. Audit staff had to revie…
Was a promotional distributor's DVD sale exempt when the customer supplied a Virginia ST-10A certificate accepted in good faith?
Yes. The DVDs contained information used in the purchaser's advertising campaign and qualified under the ST-10A certificate. Because the distributor accepted the certificate in good faith and supplied…
Could a restaurant reduce an estimated Virginia sales-tax assessment without records supporting its claim that projected sales were too high?
The estimated tax stayed because the restaurant supplied no records and did not rebut the $50,000 annual sales projection from its business-license application. Virginia waived the first-audit complia…
What certificate and application rules did Virginia's 2017 guidelines establish for tax-exempt purchases of stamped cigarettes for resale?
Starting January 1, 2018, dealers purchasing Virginia-stamped cigarettes for resale had to use Department-issued Form ST-10C rather than Form ST-10. The guidelines created fast-track, expedited, and f…
Was a corporate secretary and store manager personally liable for the company's unpaid Virginia sales and withholding taxes as a responsible officer?
No. Although she was a 50% owner, corporate secretary, and store manager, the evidence showed her husband alone controlled bookkeeping, tax preparation, filing, and payment. She lacked the required ta…
Could a retailer use Oklahoma sales tax paid on fixtures shipped by common carrier to offset Virginia use tax?
No. Oklahoma treated delivery to a common carrier for shipment outside the state as an exempt interstate sale, even though the retailer hired the carrier. The Oklahoma tax was therefore paid in error …
Could a Virginia retailer credit Oklahoma sales tax paid on fixtures that a common carrier picked up in Oklahoma and delivered to Virginia?
No. Oklahoma treated the common carrier's possession as shipment outside the state, so the fixture sales were exempt interstate transactions even though the retailer hired the carrier. The Oklahoma ta…
Could a repair business receive an audit credit for sales tax paid to vendors without invoices from the audit period proving the payments?
No. Vendor lists, general claims that vendors charged tax, and sample invoices from outside the audit period did not prove sales tax was paid on the specific resale purchases under audit. Virginia uph…
Could a retailer use exemption certificates obtained after an audit and unsupported bag claims to remove sales and purchases from the assessment?
Mostly no. Certificates dated after the audit, missing registration data, or using the wrong nonprofit form did not prove good-faith exempt sales. Virginia removed only the identified political-subdiv…
How did Virginia's July 2017 law change the sales-tax treatment of separately stated automobile repair shop-supply charges?
Beginning July 1, 2017, automobile repair shops had to collect sales tax on separately stated shop-supply charges, whether or not the supplies transferred to the vehicle or customer. The shops could b…
Could a restaurant raise a new gratuities issue after the 90-day appeal period by calling it a reconsideration request?
No. The restaurant raised gratuities after the 90-day deadline and had not included that issue in its original timely appeal. Reconsideration could correct facts, apply changed law or policy, or consi…
Did inventory owned at Virginia fulfillment centers require an out-of-state online seller to register and collect Virginia sales tax?
Yes. The seller retained ownership and control of inventory stored at Virginia fulfillment centers, which was sufficient activity under the inventory-nexus rule. Its collection and remittance duty beg…
Could an online retailer with Virginia fulfillment inventory close its registration and recover tax collected since voluntarily registering in 2015?
No. Owning goods for sale at a Virginia fulfillment center required registration under the inventory-nexus rule effective June 1, 2017. The retailer also could not recover tax collected since its Augu…
Did an out-of-state internet seller have to collect Virginia sales tax because its resale inventory was stored in a Virginia fulfillment center?
Yes. Under the 2017 inventory-nexus amendment, owning goods for sale at a Virginia fulfillment center was sufficient activity to require dealer registration. Beginning June 1, 2017, the seller had to …
What major Virginia state and local tax changes did the Department of Taxation identify in its 2017 Legislative Summary?
Virginia's 2017 Legislative Summary was a broad historical guide, not a taxpayer ruling. Major changes included a Fiscal Year 2018 tax-amnesty program, new electronic filing and payment mandates, IRC …
Were a horse-boarding facility's feed and supply purchases exempt as agricultural production, and was a six-year audit proper?
No exemption applied. The facility provided nontaxable horse-boarding services but did not raise horses for breeding or sale, so it was the taxable consumer of feed and supplies used in that service. …
Must an out-of-state subcontractor installing floors and permanently attached flooring in Virginia pay tax on its job materials?
Yes. The subcontractor was a using-and-consuming real estate contractor for floors, subflooring, and permanently attached coverings. It had to pay Virginia sales tax to suppliers on job materials or a…
Could Virginia estimate a grocery store and café's taxable sales from incomplete records, and did the estimate support penalty and interest?
Yes, Virginia could estimate the sales-tax liability because the grocery store and café kept incomplete records and did not prove the methodology wrong. But the estimate did not prove tax was actually…
Were a retailer's sales to diplomats exempt when its transaction records lacked exemption-card numbers, and could a diplomat pay with another person's card?
The audited sales were removed because later documentation proved they were made to diplomats, despite the missing exemption-card numbers. For future sales, the retailer had to record the card number …
Which manufacturing purchases, contractor charges, and services could be removed from a Virginia use-tax audit, and was the second-audit penalty waived?
Virginia removed documented items used directly in manufacturing, qualifying contractor work, hauling, HVAC maintenance, and a purchase credit, but kept taxable or unsupported items and allowed 30 day…
Did vendor emails and software activation keys prove that a computer reseller's contested software sales were electronically delivered without tangible media?
Yes. The invoices alone did not expressly certify electronic delivery, and the lack of a freight charge was not enough. But certificate-key invoices plus the vendor's statement established that the so…
Was Virginia's bank-deposit estimate of a pawn shop's unreported sales valid when records were seized, and what audit adjustments were required?
The bank-deposit estimate was reasonable because records were unavailable and the auditor excluded identified nontaxable deposits while using the representative's cash-sales testimony. But Virginia re…
What items and transactions qualified under Virginia's 2015 combined sales-tax-holiday guidelines, and what duties applied to retailers?
The 2015 guidelines created one three-day August holiday for qualifying hurricane items, school supplies, clothing, footwear, and labeled Energy Star or WaterSense products within stated per-item pric…
How could Virginia estimate taxable complimentary restaurant meals when records were missing, and did the first-audit penalty apply?
Virginia could estimate the liability because the restaurants did not document why complimentary meals were given. The auditor's 65% taxable estimate was corrected to 35% of total complimentary meals,…
Which retail products qualified as exempt nonprescription drugs or durable medical equipment in Virginia's audit?
Electrical heating pads and vaporizers qualified as durable medical equipment and were removed from the audit. A&D ointment, aloe vera, desensitizing toothpaste, contact lens solution, and disposable …
Was a company's president personally responsible for unpaid sales and withholding taxes when she signed payroll reports and tax checks?
Yes. Virginia found that the president knew about the company's tax obligations and had authority to prevent nonpayment because she signed payroll reports as president, signed sales-tax checks, access…
Is a Virginia retailer's layaway cancellation fee taxable when the order is cancelled, payments are refunded, and title never transfers?
No. When the customer cancelled the layaway, the retailer refunded the purchase payments and never transferred title or possession of the merchandise. Because no retail sale occurred, the separate $10…
Which installed home-improvement sales had to be treated as contractor real-property work, and could Virginia credit use tax paid to the first receiving state?
Virginia removed many installed items because the retailer acted as a consuming contractor rather than making installed retail sales under the law then applicable. It also allowed a possible credit fo…
Could Virginia estimate a restaurant's sales from income-tax returns when audit-period register records were missing, and did first-audit penalty apply?
Yes. Because the restaurant did not preserve or provide audit-period sales journals and register reports, Virginia used the difference between sales-tax and income-tax return sales and extrapolated it…
Could Virginia project a grocery store's three-year sales from a two-day observation, and did the 50% fraud penalty apply?
Yes. With no supporting records, Virginia reasonably used one low-sales day and one high-sales day chosen with the store to project food, nonfood, and phone-card sales across the audit period. Unsuppo…
What gold, silver, and platinum bullion sales qualified for Virginia's exemption under Tax Bulletin 15-6?
Under the 2015 bulletin, a transaction over $1,000 was exempt only for refined bullion containing at least 90% gold, silver, or platinum whose value depended on metal mass and purity and did not excee…
Was an all-terrain vehicle exempt from Virginia use tax when used to spray pastures, haul cattle feed, herd cattle, and move farm equipment?
Yes. The ATV qualified for Virginia's agricultural exemption because it was used in cattle and pasture operations, including spraying herbicides, hauling minerals and feed, herding and inspecting catt…
Did Virginia reopen a mail audit for more invoices when a retailer repeatedly failed to document claimed exemptions, tax payments, labor charges, and extrapolation errors?
No. The retailer had already received repeated requests and an extra year to provide records, yet still could not document its claimed exemptions, tax payments, duplicate items, labor charges, or extr…
Were optional bed-making and midweek housekeeping charges taxable when added to invoices for short-term Virginia accommodations?
Yes. Even though guests chose the services, they were separately charged, and the manager passed the money to a third party, bed making and midweek housekeeping were directly connected to the rented a…
Could a bakery receive audit credit for claiming it collected the reduced food rate but mistakenly remitted the general sales-tax rate?
No. Virginia agreed the bakery products qualified for the reduced food rate, but the bakery could not prove it had collected that lower rate while mistakenly remitting the general rate. Summary report…
What process did a Virginia city have to follow to qualify for, track, and receive sales-tax revenue from a proposed arena?
The city first had to execute a qualifying lease, issue bonds, or enter a facility contract and obtain a Tax Commissioner ruling. Contractors then had to register for special use-tax treatment, and th…
What Virginia state and local tax legislation did the Department summarize from the 2015 General Assembly session?
The Department's informational guide summarized 2015 enacted changes to taxes it administers and local taxes on which it assists, including general administration, income tax, sales and use tax, tobac…
Were software training, consulting, and conversion services taxable when the software package included a mailed DVD?
Yes. Although some software was electronically conveyed, the same contract delivered additional software on a DVD and contemplated tangible delivery. That made the package a taxable retail sale. Becau…
Which fiber-optics manufacturing and research purchases qualified for Virginia sales-and-use-tax exemptions?
Virginia exempted stainless-steel scissors used during molten-glass production and a specially modified production socket. It taxed cleaning equipment, supports, storage, setup tools, timers, contamin…
Could Virginia refund special use tax paid on construction equipment more than three years before the refund request?
No. Although Virginia had authorized refunds for March 2011-September 2013 after determining the out-of-state contractor did not owe the special use tax, an April 2014 request could not reach payments…
Could a sign manufacturer prove that invoice charges labeled 'Ship/Handling' were actually exempt shipping rather than taxable handling?
Yes for this audit. Carrier invoices matched the amounts billed to customers and proved that the combined label represented shipping only, so Virginia removed the assessments and directed refunds or a…
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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.