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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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…
When do customer sites become definite places of business for situsing an IT provider's Virginia BPOL receipts?
Customer sites may become definite places of business when employees work there regularly and continuously for at least 30 days, potentially requiring local licenses and receipt situs there. If the cu…
Could a Virginia county apply the local definite place of business's payroll factor to known gross receipts from business conducted in another state when calculating the BPOL out-of-state deduction?
Yes, if the data are suitable. When actual gross receipts from business conducted in another state are available, the Virginia definite place of business's payroll factor may be applied to that amount…
How should a Virginia locality calculate the BPOL out-of-state deduction when payroll apportionment is used?
When payroll apportionment is necessary, the locality may apply the Virginia payroll factor to reliable gross receipts from business conducted in a state where the taxpayer owes an income-based tax. T…
Did Virginia reverse the remand of BPOL and machinery-and-tools assessments when records did not show which of several entities performed each activity at one business location?
No. Virginia affirmed the remand to the city because the records did not identify which legal entity conducted each activity at the shared business location. The taxpayers had to provide enough docume…
How does Virginia BPOL tax treat a telecommunications company's data-transmission revenue, and does the long-distance-call exclusion cover electronic document exchanges or interstate local calls?
Data-transmission revenue is gross receipts whether the provider is a statutory telephone company or a business-service company, but the local BPOL situs rules differ. Electronic Data Interchange docu…
Was an HVAC distributor a BPOL retail merchant because contractors consumed many purchased parts while performing services, or was it a wholesaler?
Virginia classified the distributor as a wholesale merchant. Its contractor, government, and industrial customers bought goods for business use, the HVAC contractors likely used them in a productive p…
Was an HVAC equipment distributor a BPOL wholesaler when it sold mainly to contractors and business users rather than the general public?
Yes. The evidence showed sales mainly to HVAC contractors, government, and industrial customers for business use, little or no public retail activity, and individualized pricing consistent with wholes…
Could a service company situs BPOL receipts outside the city based on a contract requiring work at an out-of-state facility?
Possibly. The contract strongly suggested that the services were performed at an out-of-state definite place of business, but the taxpayer still had to document which employees performed the work and …
Could a leased county residence be a property company's BPOL business location when the records instead supported the owner's city home?
No. The company did not prove that the county rental property was a definite place of business. With no evidence of another business location, Virginia upheld the owner's city residence as the company…
Where were a service company's BPOL gross receipts sitused when its owners worked out of state but it proved no other definite place of business?
Unresolved pending more proof. Virginia gave the company 30 days to document any definite place of business outside the city. If the city office was its only definite place, all receipts belonged ther…
Was a federal IT and systems contractor properly classified as a professional engineering business for local BPOL tax?
Unresolved. Virginia found evidence that the contractor performed professional engineering services, but the taxpayer had not provided the requested gross-receipts breakdown and the county had reviewe…
How should a city resolve BPOL and machinery-and-tools liabilities when it classified the taxpayer as a manufacturer but both sides lacked complete records?
Virginia remanded the case. The city had to credit every payment the taxpayer could verify, while the taxpayer had to provide records separating the activities and receipts of multiple entities. If an…
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…
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…
Were sales of prewritten measurement software retail or wholesale sales for Virginia BPOL classification purposes?
No. For BPOL purposes, the prewritten measurement software was not physically transferred goods, wares, or merchandise and therefore was neither a retail nor wholesale sale. It was classified as a bus…
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…
How should an information-security company situs service receipts for BPOL tax when it had a Virginia headquarters and several data centers?
The Virginia headquarters and the staffed out-of-state management center were definite places of business, but mere servers at the other data centers were not. Service receipts had to be sitused first…
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 remote employees' homes or rented data-center space reduce an Internet-services company's county BPOL receipts through situs or payroll apportionment?
Potentially for 2010-2011, but not automatically. The 2009 refund claim was late. Server space alone was not a definite place of business, while employee homes could qualify after a factual review. Re…
Was a software developer a BPOL retailer or wholesaler because it delivered prewritten software on memory sticks?
No. Physical delivery on memory sticks did not outweigh the company's principal business of developing, licensing, maintaining, and supporting measurement software. Custom development, training, and m…
Could a county defeat a Virginia BPOL appeal by treating an incomplete letter as final or by placing a later appeal under the general local-tax procedure?
No. The county's December 2012 letter lacked the analysis and appeal notice required for a final BPOL determination and the parties kept working on the dispute. The December 2013 appeal qualified unde…
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…
Could Virginia decide BPOL and BTPP appeals when the county omitted the required BPOL notice and the taxpayer failed to give 30 days' direct-appeal notice?
No. The county's letter omitted the mandatory BPOL appeal language, but the taxpayer also failed to give the county 30 days' advance notice before treating the local appeal as denied. Virginia lacked …
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 a corporate general partner's voting control make three partnerships part of its BPOL affiliated group under the brother-sister test?
No. The brother-sister test counted ownership held by individuals, estates, or trusts, not the corporation's interest as general partner. Although four shareholders owned all of the corporation, their…
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…
Did assembling purchased electronic components into custom military devices qualify as manufacturing for Virginia BPOL tax?
Yes. Although many components had other uses and the process used ordinary tools, the company assembled numerous parts into integrated custom systems whose components were enclosed and not readily ide…
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…
How should Virginia BPOL receipts be assigned when a mobile consultant works from multiple residences?
The consultant's multiple residences were each definite places of business because he maintained no separate office. Receipts should be assigned, where possible, to the residence where each engagement…
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…
Could an air-charter operator bypass local BPOL appeals by requesting a Virginia advisory opinion?
No. Virginia Tax would not decide the air-charter BPOL exemption through an advisory opinion while assessments were disputed and the taxpayer had not used the required local appeal process. The taxpay…
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 leasing and possibly operating a commercial tractor a Virginia BPOL contractor business?
No contractor classification applied. Leasing the commercial tractor was a BPOL business service, and operating it to haul goods would also be a business service. Virginia remanded the assessment beca…
Were a hotel's bank transfers, loans, and real-property rent all taxable BPOL gross receipts?
Not all of them. Virginia found that the hotel had sufficiently shown most disputed deposits were transfers between its own bank accounts, and its real-property rental receipts could be excluded from …
Were an airport duty-free store's international-traveler sales exempt from county BPOL tax?
No. Federal law protected bonded duty-free merchandise from specified duties, sales taxes, and property taxes, but did not preempt a local privilege tax measured by the store's gross receipts. The cou…
Were an airport duty-free store's international-traveler sales exempt from county BPOL tax?
No. Federal law protected bonded duty-free merchandise from specified duties, sales taxes, and property taxes, but did not preempt a local privilege tax measured by the store's gross receipts. The cou…
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…
Was a company buying future receipts and making business loans a financial-services provider subject to county BPOL tax?
The company appeared to be a financial-services provider, not a buyer and seller of tangible property, because it advanced cash against future card receipts, bought receivables, and made loans. But Vi…
Could a service company use direct labor to situs city BPOL receipts and deduct receipts from out-of-state customers?
Potentially yes, but the city had to review the evidence. The company's contract-level direct-labor method appeared capable of situsing receipts where services were performed, so payroll apportionment…
Which related-entity management fees qualified for Virginia's BPOL intercompany-receipts exemption?
Only fees from ASC and VALP7 qualified. The taxpayer and ASC had identical 100% ownership, while three common owners held about 95% identical interests in the taxpayer and VALP7, satisfying both broth…
Could a Virginia locality issue one group BPOL license to itinerant merchants and exempt merchants at sponsored events?
Yes, conditionally. A locality could create an umbrella subclassification for itinerant merchants operating together for five or fewer days and divide the $500 fee, because no merchant's charge exceed…
Could Virginia hear county BPOL and BTPP appeals when the county gave incomplete appeal notice and the taxpayer skipped required notice?
No. The county's letter omitted the required appeal and collection notice, so it was not a proper final local determination. The taxpayer also had not given the county the required 30-day notice befor…
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 …
Could a telecommunications provider exclude its local BPOL tax from the sales price subject to Virginia communications sales tax?
No. BPOL tax is imposed for the privilege of doing business in a locality; it is not a tax on the customer's purchase, sale, use, or consumption of communications service, and it is not a government f…
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…
Was an LLC that bought one house and hired a contractor to renovate it engaged in a county-licensable BPOL business?
Yes as to doing business, but contractor classification required another review. Forming the LLC, seeking profitable investments, buying a house, obtaining a permit, and hiring a renovator required en…
Was a farm winery's separately charged wedding and event rental activity a separate business for county BPOL tax?
Possibly. The separately charged facility rentals could exist independently of the winery even though events promoted wine and required a minimum wine purchase. Virginia remanded the case because the …
Was a reseller of related companies' mobile service a telephone company for Virginia BPOL tax?
No. The reseller lacked an SCC certificate and FCC authorization and did not operate wireless sites, towers, switching equipment, or other mobile-service facilities. Its licensed partners supplied the…
Was a reseller of related companies' mobile service a telephone company for a Virginia city BPOL tax?
No. The reseller lacked an SCC certificate and FCC authorization and did not operate wireless sites, towers, switching equipment, or other mobile-service facilities. Its licensed partners supplied the…
Was a federally registered interstate motor carrier exempt from county BPOL tax when its local office also arranged hauling by independent providers?
Yes. The company proved that it was a motor carrier formerly certified by the Interstate Commerce Commission and currently registered with the relevant federal transportation authority. Virginia's BPO…
Was an individual paid to provide foster-care services from a home necessarily engaged in a business subject to county BPOL tax?
The ruling did not decide that the individual was engaged in a taxable business. The facts showed that a tax-exempt foster-care provider paid the individual to perform services at a definite place of …
How should a county calculate Virginia's BPOL out-of-state deduction when payroll apportionment was used to assign a multistate company's gross receipts?
The county had to follow the three-step method in P.D. 12-89: identify interstate participation by employees at the Virginia office, directly deduct receipts that could be specifically tied to that pa…
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…
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 …
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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.