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.
No Virginia rulings match these filters
Try a different search term or clear the filters.
Which audit items could a Virginia wholesaler remove using a resale certificate, electronic-delivery evidence, or customer use-tax payments?
Only the resale-certificate sales were removed. The wholesaler accepted a complete certificate in good faith. Its generic vendor email did not prove the specific software was electronically delivered,…
Could a convenience-store owner avoid converted sales- and withholding-tax assessments by disputing the underlying audits?
No, based on the existing record. The owner showed neither that another person was responsible nor that the store audits were wrong, so the assessments were properly converted to him. Virginia allowed…
What Virginia tax interest rates applied during the third quarter of 2016?
Virginia's third-quarter 2016 rates were 6% for tax underpayments and 6% for tax overpayments. The reduced rate for qualifying assessments in administrative appeals was 1%. Certain local delinquency a…
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 …
Was a defense contractor's rebuilding work exempt manufacturing for local BPOL tax, or taxable service and repair activity?
The rebuilding processes were substantial manufacturing, but exemption also required wholesale sales. One weapon-system contract primarily paid for services, while the evidence for other contracts was…
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 veterinary clinic remove sampled purchases from a Virginia use-tax audit using affidavits and lease documents instead of detailed invoices?
Mostly no. Affidavits did not prove that tax had been paid or that purchases were nontaxable, and lease documents saying payments were plus applicable tax did not show tax was included. Virginia remov…
Could a communications provider delay Virginia bad-debt tax credits for 12 months to net later customer recoveries?
No. The provider had to claim the communications-tax credit on the return covering the period when an account became worthless. Any later collection had to be included on the first return after recove…
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 managing partner personally liable when 51 monthly sales-tax returns went unfiled and business bills were paid instead?
Yes. As an active manager who handled payroll, quotes, checks, and business expenses, he had a duty to ensure sales-tax filing and payment. The record showed knowledge and willfulness while 51 consecu…
Was a managing partner personally liable for a corporation's unpaid sales tax when a bookkeeper normally filed the returns?
Yes. The bookkeeper's usual filing role did not eliminate the managing partner's own duty. He had signed returns and tax documents, managed the business, knew taxes were collected and unpaid, and had …
What Virginia state and local tax legislation did the 2016 General Assembly enact?
This Department guide summarizes state and local tax legislation enacted during Virginia's 2016 General Assembly session through the April 20 reconvened session. Each entry identifies the legislation,…
Which department-store audit items could be removed when the retailer supplied transaction-level proof?
Documented items were adjusted, while unsupported claims stayed taxable. Virginia credited partial use tax, removed returned goods, separately stated alterations, and two proven out-of-state shipments…
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…
Were stretch-mark cream, anti-wrinkle cream with SPF 15, and SPF 50 sunscreen exempt nonprescription drugs?
Only the SPF 50 sunscreen was exempt. It used a nonprescription drug to prevent sunburn. Stretch-mark therapy and anti-wrinkle cream were taxable cosmetics because their primary use was improving appe…
Could former owners be personally liable for business taxes arising after they left the company?
No. A mutual exit agreement and corrected ownership returns showed that the former owners ended their association with the business on March 1, 2013, before the April 2013-March 2014 tax periods. The …
Could a Virginia wholesaler remove sampled sales from an audit using corrected resale certificates and supporting customer records?
Yes. After greater scrutiny of certificates obtained or corrected during and after audit, Virginia removed the sales for Customers 1, 2, 3, 5, 6, and 7. The Department verified the claimed resale uses…
Are replacement air-conditioning units and repair parts for exempt manufacturing cranes also exempt from Virginia sales tax?
Yes. The cranes were used directly to move in-process material and qualified as exempt manufacturing equipment. Because their air-conditioning units were integral original components, replacement unit…
Did a telecommunications provider make taxable use of broadcast equipment it paid for under an FCC relocation plan?
No. The provider reviewed purchases for FCC reimbursement and paid the invoices, but the broadcasters selected, received, inspected, and controlled the equipment. Because the provider exercised no suf…
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…
Was software exempt when specific vendor records proved it was downloaded, despite freight for promotional materials and a guide?
Yes. A vendor certification, dated download history, and email with the product serial number proved the software itself was delivered electronically. Virginia revised the paid audit assessment and or…
Could a grocery store overturn an estimated sales-tax audit without sales records supporting its claimed exempt-sales percentage?
No. With no adequate sales records, Virginia could estimate sales from cash-flow statements and a 25% markup. A Form 1099-K did not isolate food-stamp sales or prove that 65% of sales were exempt. The…
Could a retailer obtain a 2010 Accelerated Sales Tax refund after the three-year claim deadline because it lacked notice of the limit?
No. The June 2010 payment was due July 20, 2010, but the Department did not receive the refund request until October 2014. Virginia's three-year deadline had expired, and claimed lack of notice or dif…
Are remote maintenance and alarm-code changes taxable when customers monitor the video-security systems themselves?
Yes. Because the customers—not the seller—reviewed the surveillance images, the systems were non-monitored systems and taxable sales of tangible property. Remote maintenance and alarm-code changes sup…
Are charges for advertising space in hospital display cases taxable, and who owes tax on the cases?
The advertising-space charges were not taxable retail sales. The concessionaire remained the owner and consumer of the removable display cases, so it owed Virginia use tax on them if no similar tax ha…
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…
How did Virginia treat flooring strapping equipment, late resale certificates, and a challenged sales-audit sample?
The production strapping, machine, and parts were exempt. Four sales stayed taxable because the customer's later certificate was incomplete and the customer was not registered at the sale dates. Virgi…
Were end-of-line lumber strapping, the strapping tool, and repair parts exempt manufacturing property?
Yes. Lumber was not ready for sale until it was strapped at the end of the production line. The strapping, tool, and repair parts performed an immediate production and quality-control function before …
Were strapping materials and strapping-tool parts used throughout lumber production exempt from Virginia use tax?
Yes. The strapping protected and conveyed unfinished lumber between production stages and bundled finished lumber before storage or shipping. It played an immediate production and quality-control role…
Was an off-site warehouse still ancillary to manufacturing when it directed sales activity, ran vending operations, and distributed third-party goods?
No. The facility did more than store the manufacturer's finished goods: it directed employees engaged in sales-related activity, operated a vending business, and handled products made by others. It wa…
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…
When were sales of an implantable urinary prosthetic device exempt from Virginia sales tax?
Sales were exempt when a licensed practitioner purchased the implant for a specific patient under a prescription or work order, including direct delivery, advance shipment, and consignment. Bulk purch…
Were intercompany equipment-cost allocations taxable rental charges even without cash payment or markup?
Yes. The holding company owned and depreciated equipment, transferred possession to subsidiaries, and recorded monthly cost allocations. Those accounting entries were consideration for taxable rentals…
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…
Were prescription-only natural latex mattresses exempt durable medical equipment in Virginia?
No. The mattresses were useful even without illness or injury, so they failed a mandatory durable-medical-equipment test despite required prescriptions. Virginia also replaced the 50% fraud penalty wi…
Could a countertop seller exclude combined installation labor and profit from sales tax and reduce withholding without supporting records?
Not on the records presented. A single charge combining exempt installation labor with taxable profit remained taxable, and the seller had not substantiated its wage, profit, or independent-contractor…
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…
Did renting Virginia web servers create corporate-income-tax or sales-tax nexus for an online healthcare retailer?
Corporate-income-tax nexus could not be decided without more facts about how the rented Virginia servers were used. If nexus existed, the equipment belonged in the Virginia property factor. Third-part…
What happened when a medical-equipment seller supplied new documents after a Virginia sales-tax audit?
Virginia did not decide the claimed exemptions outright. Because the seller supplied additional records after the audit, the Department returned the case to audit staff for review and directed that th…
Could a road-service provider reduce an estimated sales-tax audit without records proving vendor tax and snow-clearing revenue?
No. Virginia could allow credit for verified sales tax paid to vendors on resale property, but the taxpayer supplied no proof. It also failed to document claimed snow-clearing revenue, so the estimate…
Could construction contractors estimate Virginia consumer use tax by allocating inventory cost according to Virginia revenue?
No. Virginia use tax had to be computed from the actual cost of materials used in Virginia, not a revenue-based estimate. The contractors could use FIFO for commingled inventory and had to assign the …
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…
Were staffing services bundled with leased copying equipment taxable to a Virginia nonprofit?
The staffing was normally taxable because it directly supported the leased equipment and was part of the sale. But the nonprofit's exemption certificate covered the equipment lease and connected servi…
Did selling scrap from a Virginia research pilot line destroy the facility's sales-tax exemption?
No. The Virginia facility existed solely to improve an existing film product, and the unusable scrap was only a by-product of that research. Finding a buyer for the waste did not turn the facility int…
Were bulk prosthetic parts and patient-specific liners exempt from Virginia sales tax?
Bulk purchases were taxable even when parts were later fitted or attached to an exempt prosthetic device. Liners ordered for an identified patient were exempt as purchases on that individual's behalf,…
Were a photographer's service fees taxable when customers received images on flash drives or as prints?
Yes. The true object of the package was the images delivered as tangible property, so photography, editing, posting, and related service fees were taxable. Flash drives and albums transferred to custo…
When could Virginia governments, nonprofits, and churches buy meals and catering tax-free under the 2016 policy?
For purchases on or after April 22, 2016, qualifying entities could use their exemption certificates for meals and related catering services. State and local governments and nonprofits had to meet a m…
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…
Could Virginia's Department of Taxation review a county's refusal to waive mobile-property-tax penalties and interest?
No. The state administrative appeal process covered disputes over the amount of local mobile property tax, while these owners accepted the tax and challenged only penalties and interest. State law lef…
When could a Virginia restaurant accept government, nonprofit, school, or church exemption certificates for meals and catering?
Meals and catering were sales of tangible property, so a restaurant could accept a valid exemption certificate when the qualifying entity used the food for an official purpose, paid directly, and cont…
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…
Browse Virginia rulings by topic
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.