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 a taxpayer receive Virginia's 2009 amnesty benefits for old liabilities when the required returns were not filed by December 5, 2009?
No. Virginia's 2009 amnesty required all relevant returns and supporting documents to be filed, and the qualifying liability paid, by December 5, 2009. The taxpayer did not file several old returns un…
Could a Virginia resident claim an out-of-state tax credit for wage withholding that the other state fully refunded?
No. The other state's return showed a full refund of the wage withholding, so no tax remained actually paid there. Allowing the same amount as a Virginia credit would create a double benefit. If the o…
Did a temporary State Department assignment abroad make a Virginia couple nonresidents and allow them to exclude the husband's overseas income?
No. The couple kept their permanent Virginia home, voter registrations, vehicles, licenses, and intent to return, so the temporary overseas posting did not end domicile. Virginia taxed the husband's f…
Did Virginia have to allow a conservation-contribution deduction equal to all federal adjusted gross income when the IRS allowed only 50%?
No. Virginia itemized deductions followed the amount accepted federally, and the IRS record showed the qualified conservation deduction was reduced from 100% to 50% of federal adjusted gross income. T…
Did a Virginia partner's Maryland Schedule E professional income and interest qualify for Virginia's full border-state tax credit?
No. The husband's distributive partnership income reported on Schedule E was business income, not earned income or Schedule C business income for the special border-state rule. His Maryland-source int…
Could a taxpayer obtain full Virginia refunds for 2009-2013 by claiming foreign domicile after filing 2009 late and retaining strong Virginia ties?
No. The 2009 full-refund claim was filed after the three-year deadline, and the two-year assessment-payment exception did not apply because the domicile claim went beyond the IRS-income adjustment ass…
Did an overseas assignment establish foreign domicile when the taxpayer kept a Virginia license, voting and vehicle ties, and intended to return?
No. Although the taxpayer leased a home, licensed vehicles, and obtained a driver's license abroad, he retained Virginia voter and vehicle ties, renewed his Virginia license, claimed he filed Virginia…
Could Virginia consider a dental-practice sales-tax appeal faxed November 25 when the 90-day filing period expired November 20?
No. The August 21 assessments had to be appealed by November 20, 2015 under Virginia's 90-day rules, but the dental practice faxed its challenge on November 25. The Tax Commissioner therefore could no…
Did a for-profit family medical practice need each controlled-drug invoice to name a licensed physician or DEA number to claim Virginia's medical-entity exemption?
No. The physician-name or DEA-number invoice requirement applied to a separate exemption for controlled drugs purchased by an individual licensed practitioner. After the 2006 amendment, a qualifying f…
What did Virginia's 2015 pass-through entity withholding guidelines require for nonresident owners, exemptions, composite returns, filing, and payment?
For taxable years beginning on or after January 1, 2015, a pass-through entity with Virginia-source taxable income generally had to pay withholding equal to 5% of each nonresident owner's allocable sh…
Did timely protective claims produce additional Virginia refunds for the taxpayer's 2010 and 2011 overpayments?
No. The protective claim itself was timely, but the underlying 2010 original return was filed after the three-year refund deadline, so that overpayment could not be refunded. The 2011 refund had alrea…
Did a Virginia LLC with one rental property have to withhold 5% for its nonresident members after fully disclosing every owner?
No. Although Virginia generally requires 5% pass-through withholding on Virginia-source income allocated to nonresident owners, the LLC qualified for the rental exception. It had one Virginia rental p…
Could a military spouse avoid Virginia income tax for 2009 and 2010 by claiming the servicemember's out-of-state domicile?
No. The Department found that the spouse had established Virginia domicile after moving there in 2008. The Servicemembers Civil Relief Act did not let her simply elect her spouse's domicile, and the r…
Who determines a property's value for Virginia recordation tax when an auction price, assessment, and appraisal disagree?
The county circuit-court clerk had to determine the property's actual value after considering the taxpayer's appraisal and other reliable evidence. A recent assessment carried a strong presumption of …
Did buying an out-of-state home and changing a driver's license and voter registration prove that a taxpayer abandoned Virginia domicile?
No. Although the taxpayer bought a home and changed a license, vehicle registration, and voter registration in another state, he retained a jointly owned Virginia home where he stayed, operated his bu…
Did a fourth appraisal and conditional purchase offers justify increasing the claimed value of a Virginia conservation easement?
No. The Tax Commissioner upheld the Department's appraisal and the resulting assessments. The taxpayer's appraisals emphasized physical development potential but did not adequately account for weak co…
Did Virginia allow a 2009 net operating loss caused by theft to be carried back three years to a 2006 individual return?
Yes. Under the historical federal rule Virginia followed, the portion of an individual's net operating loss arising from casualty or theft had a three-year carryback. Virginia's exception for elected …
Would Virginia suspend 2010 and 2011 assessments while a taxpayer continued contesting the IRS audit that produced the federal adjustments?
No. Virginia used the IRS information then available and would not independently revisit the federal taxable-income determination. The 2010 and 2011 assessments remained due and payable. If the IRS la…
Did a married couple prove that the husband left Virginia before 2013 and the wife changed domicile to another state in April 2013?
Yes. The evidence showed that the husband was domiciled in another state throughout 2013 and spent only about 60 days working in Virginia, while the wife abandoned Virginia and began residing exclusiv…
Did relinquishing a trust instrument's power to substitute assets convert the irrevocable grantor trust into a complex trust without a court order?
Yes. The trust instrument expressly allowed the grantor to relinquish the power to substitute assets by written notice. Exercising that provision was not a modification requiring a court order or bene…
Could a parent restore a subsidiary to its Virginia consolidated return without documenting the subsidiary's Virginia nexus and source income?
Not on the record provided. The auditor removed the subsidiary because it appeared not to have Virginia nexus, and the parent failed to supply requested records showing Virginia-source income or taxab…
Were taxpayers entitled to a Virginia refund merely because they filed an amended federal return contesting an IRS audit?
No. Virginia properly assessed 2011 tax from the IRS information after the taxpayers failed to report the federal adjustment, and it would not independently revisit the IRS determination. Their refund…
Who owed Virginia sales or use tax when a retailer sold and installed a modular home, and how did the 2013 regional rates apply?
The retailer that contracted to furnish and install the modular home was the taxable real-property contractor; the resident customer owed no sales tax on the construction-service transaction. Under th…
Was a California resident's February 2015 amended Virginia return timely after California changed her 2010 tax liability that same month?
Yes. Although the ordinary three-year period for amending the 2010 Virginia return had expired, Virginia law allowed one year after another state's final tax change. California disallowed its credit i…
When did a Virginia resident working and traveling abroad establish a new foreign domicile during 2012?
The taxpayer remained a Virginia domiciliary resident until August 2012, when he began leasing a home in the foreign country where he had accepted employment. Time spent traveling or temporarily carin…
Did Virginia's recomputation of a taxpayer's retirement-income subtraction produce relief for the paid 2010 assessment?
Yes. Virginia used the available records and W-2-verified contributions to recompute the allowable retirement subtraction. It reduced the paid 2010 assessment and directed a refund with accrued intere…
Could taxpayers defeat Virginia assessments by disagreeing with final IRS audit adjustments to their 2010-2012 federal income?
No. Virginia relied on the IRS's final audit adjustments and would not re-decide whether the taxpayers qualified for federal securities-trader treatment. The 2010-2012 assessments were upheld, but the…
Did a taxpayer prove he was not a Virginia resident in 2011 after ignoring requests for domicile records?
Not yet. The taxpayer said he had lived outside Virginia since 2004, but Virginia records showed later resident returns, an active Virginia driver's license, and financial documents sent to a Virginia…
Did overseas contract work make a husband a Virginia part-year resident when his family home and other domicile ties remained in Virginia?
No. The husband remained a Virginia domiciliary resident while working abroad because he kept a permanent Virginia home with his wife, vehicles and a driver's license there, and presented no evidence …
Did three months of bank statements prove that an out-of-state domiciliary spent too few days in Virginia to be an actual resident in 2010?
No. The taxpayers claimed they spent only 35 days in Virginia, but supplied bank statements for only January through March rather than the full 2010 year. Virginia upheld the presumptively correct ass…
Was a nonprofit hospital's fee for screening, testing, pasteurizing, storing, and distributing donated human milk subject to Virginia retail sales tax?
No. Virginia treated donated human milk as a self-replicating body fluid and the hospital's screening, testing, pasteurization, storage, and distribution fee as a nontaxable processing service. Becaus…
Did the Internet Tax Freedom Act exempt broadband recovery, activation, and early termination fees from Virginia communications sales tax?
No. Virginia treated the broadband recovery, service activation, and early termination fees as taxable communications services because they covered connection, cost recovery, or termination functions.…
Did the Internet Tax Freedom Act exempt broadband recovery, activation, and early termination fees from Virginia communications sales tax?
No. Virginia treated the broadband recovery, service activation, and early termination fees as taxable communications services because they covered connection, cost recovery, or termination functions.…
What audit relief did Virginia grant a food and facilities management company that disputed untaxed sales, purchases, penalties, and a local meals-tax overpayment?
Only limited relief. Virginia removed one sale covered by a customer's direct payment permit and one documented purchase, but kept the other unsupported audit items and denied penalty waiver. The comp…
Could Corporate Executive Board replace Virginia's statutory corporate apportionment method with customer billing-address sourcing for its subscription income?
No. The Arlington Circuit Court upheld Virginia's statutory apportionment method for CEB's 2008-2010 income. CEB did not prove the method unconstitutional, inequitable, or grossly distorted, and its p…
Can a Virginia locality or its economic development authority earn transferable Land Preservation Tax Credits by donating a conservation easement?
No. Virginia concluded that a locality is not a 'taxpayer' under the tax-title definition, and an economic development authority is likewise a governmental political subdivision outside the listed tax…
Could Virginia residents use the special border-state credit for partnership income reported in Maryland, North Carolina, and West Virginia?
No. The special rule applied only to qualifying income from one contiguous state, and in 2012 only North Carolina met the required tax-base condition. The taxpayers' North Carolina partnership income …
Could a nonfiler overturn a 2012 Virginia assessment by claiming domicile in another state but providing no objective evidence?
No. The taxpayer ignored two residency-document requests and provided no objective evidence that he had abandoned Virginia domicile and acquired another one. The best-information assessment remained p…
Were machines that made disposable wax patterns and ceramic molds directly used in manufacturing and subject to a Virginia city's machinery-and-tools tax?
Yes. Virginia found that making wax patterns and ceramic molds was part of the metal producer's manufacturing process because each stage transformed raw materials into a substantially different produc…
Did Virginia accept a taxpayer's appraisal and order a recordation-tax refund for land conveyed subject to a leasehold interest?
Not yet. Virginia rejected land-use assessment as the recordation-tax measure but found that a qualified appraisal could be relevant to fair market value. The county clerk had to reconsider the underl…
Could a husband under age 70 claim his older wife's unlimited Virginia prepaid-tuition deduction by saying he bought the contracts as her agent?
No. The husband created and owned the prepaid tuition contracts and made the contributions in his own name, so the under-70 purchaser's $4,000-per-contract limit applied. Marriage alone did not prove …
Could one owner combine two single-member LLCs on one Virginia pass-through return after electing S-corporation treatment for both?
No. Electing S-corporation treatment made each single-member LLC a separate, non-disregarded pass-through entity for Virginia filing purposes. Federal grouping of their activities for passive-loss ana…
Did a District of Columbia resident who commuted to a Virginia job and earned only wages owe Virginia income tax for 2013?
No. Virginia had no reciprocal income-tax agreement with the District of Columbia, but the taxpayer qualified for the separate daily-commuter filing exclusion. He lived in D.C., worked exclusively in …
Did a military home of record in another state prevent Virginia from treating a service member as domiciled in Virginia for 2012?
No. The service member's home of record did not outweigh his long-term Virginia home, driver's license, vehicle registrations, resident returns, family residence, and decision to remain after retireme…
Could a Virginia resident exclude short-term National Guard pay as extended active-duty pay or under the Servicemembers Civil Relief Act?
No. The taxpayer was a Virginia resident, did not show qualifying active military status under the Servicemembers Civil Relief Act, and did not prove extended active duty exceeding 90 days. The Nation…
Did Virginia accept a taxpayer's appraisal and immediately refund recordation tax calculated from a higher county assessment?
Not immediately. Virginia treated the county assessment as strongly presumed accurate but directed the circuit-court clerk to reconsider actual fair market value using the taxpayer's appraisal and all…
Did a copy of a federal return prove that Virginia's 2011 assessment used the wrong federal adjusted gross income?
No. Virginia relied on the higher federal adjusted gross income reported by the IRS because the taxpayer supplied no objective proof that the IRS data was wrong. The assessment was upheld, but the tax…
Was a Virginia sales-tax appeal timely when the 90th day fell on Sunday but the envelope was postmarked Tuesday?
No. The 90th day fell on Sunday, so Virginia extended the filing deadline only through Monday, the Commonwealth's next business day. The taxpayer's appeal was postmarked Tuesday—one day late—so the De…
Could a qualified funeral trust contest Virginia fiduciary assessments after filing its first appeal letter beyond the 90-day deadline?
No. Virginia required a complete administrative appeal within 90 days of each assessment. The trustee's first appeal correspondence arrived well after the deadline even for the most recent assessment,…
Could a winery receive Virginia's 2014 Farm Wineries and Vineyards Tax Credit after filing its application after April 1, 2015?
No. Virginia required the 2014 credit application and supporting documents by April 1, 2015. Because the credit had a $250,000 annual cap that could require pro-rata allocation among timely applicants…
Did paying the full balance with a 2014 part-year return eliminate Virginia's estimated-tax underpayment addition and accrued interest?
No. Paying the balance with the return did not replace the required timely withholding or estimated installments during 2014. The couple did not satisfy the prior-year or annualized-income exceptions,…
Could unfamiliarity with Virginia law or website language save a 2010 refund claim filed after the limitations period?
No. Virginia held that the automatic extension still required filing by the extended due date and timely payment of the estimated balance. Because the taxpayers did neither, the refund period ran from…
Did paying income tax to a former state excuse a full-year Virginia resident from filing a 2012 Virginia return?
No. The taxpayer lived and worked in Virginia throughout 2012, so another state's withholding and return did not remove the Virginia filing duty. He was responsible for updating his employer's withhol…
Did the 2009 military-spouse law automatically end a spouse's existing Virginia domicile without personal presence in the service member's state?
No. The military-spouse amendment was not retroactive and did not let the taxpayer simply elect her spouse's domicile. Because she had established Virginia domicile and did not acquire personal presen…
Were Virginia vacation-home rentals for fewer than 90 continuous days subject to retail sales tax, including seasonal rentals?
Yes. Virginia treated vacation homes regularly offered for fewer than 90 continuous days as taxable transient accommodations, whether the provider was a business or individual and whether an entire ho…
Could a Virginia resident reduce an estimated 2012 nonfiler assessment by filing the actual return with income and deductions?
Yes, through filing the actual return. Virginia could estimate liability from IRS information when the resident did not file or supply records. The taxpayer received 30 days to submit a 2012 Virginia …
Did storing resale inventory in a Virginia fulfillment center require out-of-state online sellers to register for Virginia sales tax in 2015?
No, under the 2015 statute and stated facts. The sellers owned resale inventory stored in independent Virginia fulfillment centers but had no Virginia offices, employees, locations, warehouses, agents…
Could taxpayers restore a 2013 estimated-payment carryover by repeatedly ignoring Virginia's earlier out-of-state credit adjustments?
No. Virginia traced the carryover from 2010 through 2013 and upheld its reductions because the taxpayers kept reclaiming an out-of-state credit the Department had previously adjusted. The 2013 assessm…
Must subcontracted services be considered when a Virginia locality classifies a contractor for BPOL tax?
Yes. BPOL classification generally depends on the goods or services the business offers customers. Because the contractor remained responsible for services performed by subcontractors, those activitie…
Did a three-year foreign job and another state's license, voting, and vehicle records prove that a Virginia domiciliary changed domicile?
No. The taxpayer's three-year foreign assignment was for a definite term, and she showed no permanent intent to remain abroad. Although she obtained another state's license, voter registration, and ve…
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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.