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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What state and local tax legislation did Virginia's Department of Taxation summarize for the 2011 General Assembly session?
This was a broad historical guide, not a taxpayer-specific ruling. It summarized 2011 legislation through the April 6 reconvened session, including electronic filing and delivery rules, fixed-date IRC…
When did Virginia treat a tax return or payment sent by commercial delivery service as timely filed?
Effective July 1, 2011, Virginia treated state and local tax returns and payments sent by a recognized commercial delivery service like U.S. mail when they were in a sealed envelope or container beari…
What Virginia tax interest rates applied during the third quarter of 2011?
Virginia's third-quarter 2011 rates were 6% for tax underpayments and 6% for overpayments, reflecting corresponding 4% federal rates plus two percentage points. Taxpayers with a June 30, 2011 year-end…
Could manufacturing lines qualify as idle machinery without advance written notice to the county?
Possibly under the separate one-year test, even though the manufacturer failed the advance-notice test. Virginia remanded because neither side had established whether there was a reasonable prospect t…
Is artwork held by a Virginia gallery on consignment inventory subject to the gallery's local merchants' capital tax, and how is purchased art valued?
No. Artwork held by a gallery on consignment remained owned by the artist and was not the gallery's inventory for merchants' capital tax. Artwork the gallery actually purchased for resale would be inv…
Are a manufacturer's computers, vehicles, furniture, and other assets automatically excluded from Virginia local machinery-and-tools tax?
No. Classification depends on how each asset is actually used, where it is located, and whether the taxpayer documents transfers or disposals. Computers and software directly used in manufacturing can…
Could a city impose consumer utility tax when an affiliate bought natural gas and caused it to be delivered through pipelines it did not own?
Yes. Virginia treated the affiliate as a pipeline distribution company because it bought the gas and caused it to be transmitted by pipeline, even without owning or operating the pipeline. The 2001-20…
Did a federal-contract joint venture create a Virginia definite place of business merely by using a member's office address for nine months?
No. Virginia advised that merely sharing a member's Virginia office address did not create a definite place of business when the joint venture had no employees, property, phone, records, signage, adve…
Were a restaurant tenant's permanently attached leasehold improvements real property rather than taxable business tangible personal property?
Yes. Concrete, masonry, doors, windows, plumbing, HVAC, electrical work, trim, and built-in furnishings were annexed and adapted to the premises, and the lease showed attached improvements became the …
Was a Virginia facility that assembled raw materials into prefabricated home components a manufacturer for local property-tax purposes?
Yes. The facility transformed wood, steel, insulation, concrete, and other raw materials into substantially different foundation walls, trusses, wall panels, and interior walls. Its manufacturing acti…
What Virginia tax interest rates applied during the second quarter of 2011?
Virginia's second-quarter 2011 rates were 6% for tax underpayments and assessments and 6% for overpayments and refunds. Calendar-year 2010 estimated-tax additions kept the first-quarter 5% rate throug…
Could City 1 impose 2009 BTPP tax on a business aircraft that used its hangar more than any other location but stayed there less than six months?
No. Although the aircraft was registered and based at City 1's airport and spent more time there than anywhere else, it was hangared there for less than six months in 2009. Virginia found it was not n…
Did a motel operator prove that a city's business-property assessments included its parent's assets or exceeded fair market value?
Not on the existing record. The city relied on a fixed-asset list supplied by the motel's accountant, and the taxpayer did not prove that the assessment included parent-owned property or used incorrec…
Did four 15-ton refrigeration units installed at a warehouse become real-property fixtures or remain business tangible personal property?
Virginia did not make a final fixture classification. The city erred by focusing on the seasonal tenant's production use rather than the owner's intent, but the owner had not supplied objective eviden…
Could a county tax blue-book aircraft values when the resident claimed he owned only FAA titles for aircraft that no longer physically existed?
Not without proof of tangible aircraft. FAA records showed titles in the resident's name, but local mobile property tax applied to physical property that could be perceived and was sitused in the coun…
What Virginia tax underpayment and overpayment interest rates applied in the first quarter of 2011?
Virginia's state tax underpayment and overpayment rates were both 5% for the first quarter of 2011, two percentage points above the corresponding 3% federal rates. The 5% underpayment rate also applie…
Could the Virginia Tax Commissioner waive a city's penalty when a business's accountant filed its machinery and tools tax return one day late?
No. The Tax Commissioner could review certain local business tax assessments, but a locally imposed late-filing penalty was not an assessment of tax under the governing appeal statute. Virginia law le…
What Virginia tax interest rates applied during the fourth quarter of 2010?
Virginia's fourth-quarter 2010 rates were 6% for tax underpayments and 6% for tax overpayments. The corresponding federal underpayment and noncorporate overpayment rates were 4%. For taxpayers with ye…
Could a Virginia prime contractor deduct payments to an independent subcontractor from gross receipts subject to local BPOL tax?
No. Virginia held that the prime contractor could not deduct payments to its independent subcontractor from BPOL gross receipts, even though the subcontractor was separately taxable and received 98% o…
Could a video post-production company remove bundled application software from computer value and reclassify specialized equipment for local property tax?
Not on the evidence provided. Virginia agreed that qualifying application software can be treated as intangible property even when bundled with hardware and not separately billed, but the company had …
Did an equipment rental company qualify as a short-term rental business when less than 80% of annual rental receipts came from periods of 92 days or less?
No. For 2007 and 2008, the company failed the statutory test because less than 80% of its annual gross rental receipts came from transactions lasting 92 consecutive days or less, including extensions …
What state and local tax legislation did Virginia's Department of Taxation summarize for the 2010 General Assembly session?
This was a broad historical guide, not a taxpayer-specific ruling. It summarized 2010 legislation enacted through the April 21 reconvened session, including a shorter state collection period, expanded…
What Virginia tax interest rates applied during the third quarter of 2010?
Virginia's third-quarter 2010 rates were 6% for tax underpayments and 6% for tax overpayments. The corresponding federal underpayment and noncorporate overpayment rates were 4%. For taxpayers with yea…
Was payroll apportionment automatically required to split a cable provider's BPOL gross receipts between two local offices?
No. Virginia treated payroll apportionment as a last-resort method used only when it is impractical or impossible to attribute service receipts under the general definite-place-of-business rules. The …
Did a federally chartered savings association remain a 'bank' subject to Virginia bank franchise tax instead of corporate income tax?
No. Virginia ruled that a federal savings association was not a 'bank' under the state's bank franchise tax definition. After the institution changed status in early 2008, it had to file a Virginia co…
Could a Virginia city collect consumer utility tax assessments after the five-year local-tax collection period expired during the appeal?
No. Virginia's general local-tax collection statute allowed enforcement for five years after December 31 of the assessment year, and the consumer utility tax appeal statute did not extend that deadlin…
What Virginia tax assessment and refund interest rates applied during the second quarter of 2010?
Both Virginia tax underpayments and overpayments carried a 6% annual interest rate from April 1 through June 30, 2010. The corresponding federal rates remained 4%, and Virginia law added two percentag…
Did an out-of-state national bank owe Virginia bank franchise tax because it maintained a mortgage-loan office in the Commonwealth?
No. The nationally chartered bank had no Virginia principal-office charter, and its mortgage-loan office did not accept customer deposits. Virginia held that making loans without regular deposit-takin…
Did a national bank owe Virginia bank franchise tax merely because it operated a trust office in the Commonwealth?
No. The bank had no Virginia principal-office charter and its acquired trust office did not accept customer deposits. Virginia treated regular deposit-taking as necessary to conduct a banking business…
What Virginia tax assessment and refund interest rates applied during the first quarter of 2010?
Virginia tax assessments and refunds both carried a 6% annual interest rate from January 1 through March 31, 2010. The federal underpayment and noncorporate overpayment rates remained 4%, and Virginia…
Was a retail tenant's storefront sign a real-property fixture rather than taxable business tangible personal property?
No. Although the sign was attached to the storefront, the lease treated signage as the tenant's property and contemplated its removal when the lease ended. The taxpayer's stated desire to remain in bu…
How should a global telemarketing company apportion direct-response receipts to a Virginia call center for BPOL tax?
Virginia upheld the general payroll-apportionment formula: worldwide receipts multiplied by Virginia call-center payroll divided by total payroll. The taxpayer could not first subtract all receipts fr…
What Virginia tax interest rates applied during the fourth quarter of 2009?
Virginia's fourth-quarter 2009 rates were 6% for tax underpayments and assessments and 6% for tax overpayments and refunds. The corresponding federal rates for underpayments and noncorporate overpayme…
What state and local tax legislation did Virginia's Department of Taxation summarize from the 2009 General Assembly session?
This historical Department guide summarizes tax legislation enacted through the General Assembly's February 28, 2009 adjournment. It covers general administration, income and recordation tax, sales an…
Were contracted college and military food-service programs BPOL retail businesses or professional and specialized occupations?
The contracted meal programs were professional and specialized occupations because the colleges or military were the customers and meals were part of a managed service. Direct sales to individual patr…
What interest rates did Virginia apply to state tax assessments and refunds in the third quarter of 2009?
Virginia's third-quarter 2009 rate was 6% for state tax underpayments and 6% for overpayments. The bulletin also applied the 6% rate through October 15, 2009 for certain estimated-tax additions of tax…
Did claims of age, inefficiency, technological obsolescence, and low resale proceeds prove that a county overvalued manufacturing machinery?
No. A machinery-and-tools assessment was presumed correct, and the manufacturer supplied no appraisal or other clear evidence that the county's statutory percentage-of-original-cost method produced a …
Did a four-corporation chain with the stated 80%-plus voting ownership qualify as a BPOL affiliated group, excluding intercompany employee-leasing receipts?
Yes. At least 80% of each subsidiary's voting interests was owned by one or more group members, and the common parent directly held at least 80% of two corporations. With no nonvoting stock, the state…
How should a multinational service firm apply BPOL payroll apportionment and the deduction for business conducted outside Virginia?
Virginia upheld the county's use of total worldwide receipts multiplied by county payroll over total payroll because the firm had definite places of business inside and outside Virginia. The firm coul…
What Virginia tax interest rates applied during the second quarter of 2009?
Virginia's April 1-June 30, 2009 rates were 6% for tax underpayments and 6% for tax overpayments. The 6% underpayment rate also applied through July 15, 2009 for specified estimated-tax computations b…
Could a city impose its grandfathered telephone-company BPOL rate or service receipts tax on a cellular provider with a local retail kiosk?
Not on the cellular-service receipts. The city's ordinance used a narrow telephone-company definition that did not cover the PCS provider, and its service was directed and controlled from headquarters…
What Virginia tax interest rates applied during the first quarter of 2009 to assessments, refunds, estimated-tax additions, and local taxes?
For January 1 through March 31, 2009, Virginia's state interest rates were 7% for tax underpayments and assessments and 7% for tax overpayments and refunds, reflecting federal 5% rates plus two percen…
What Virginia tax interest rates applied during the fourth quarter of 2008?
For October 1 through December 31, 2008, Virginia's state interest rates were 8% for tax underpayments and assessments and 8% for tax overpayments and refunds, reflecting federal 6% rates plus two per…
Did a Virginia city's former E-911 tax apply to hundreds of internal phone lines that could not access the local exchange or emergency center?
No. The former E-911 tax applied only to lines accessing the local exchange system and public safety answering point, not private internal communications lines. The city's October 2003-December 2005 a…
What Virginia tax assessment and refund interest rates applied during the third quarter of 2008?
Virginia's rates were 7% for both tax underpayments and assessments and tax overpayments and refunds from July 1 through September 30, 2008. The corresponding federal rates were 5%.
How did Virginia classify a vertically integrated manufacturer's city assets for local personal-property tax?
Virginia classified the single integrated business as a manufacturer. Machinery and tools directly used to transform soybeans into oil and feed were subject to city M&T tax; most other qualifying capi…
What Virginia state and local tax legislation did the Department summarize for the 2008 General Assembly session?
This was a broad historical guide, not a taxpayer-specific ruling. It summarized 2008 legislation through March 13, including federal conformity, income-tax credits and administration, sales-tax exemp…
Could an interior designer receive separate BPOL classifications for design services and independent furniture retail sales?
Potentially. Furniture sold as part of design work was business-service revenue, while substantial independent furniture sales could qualify for a retail BPOL classification. Because the designer had …
What Virginia tax underpayment and refund interest rates applied during the second quarter of 2008?
Virginia's April 1-June 30, 2008 rate was 8% for tax underpayments and 8% for overpayments. The federal rates were 6%, and Va. Code § 58.1-15 added two percentage points. The 8% underpayment rate also…
When could church-operated day-care centers qualify for Virginia's charitable nonprofit BPOL exemption?
A church day-care center could qualify if it met the federal § 501(c)(3) standards and furthered the church's exempt purpose, with BPOL still possible on unrelated business income. Church A had strong…
When did Virginia's 2008 guidelines classify machinery and tools as idle and exempt from local machinery-and-tools tax?
Machinery and tools were classified as exempt intangible property when they had been continuously unused for at least one year before tax day, were unused on tax day, and had no reasonable prospect of…
What Virginia tax underpayment and refund interest rates applied during the first quarter of 2008?
Virginia's January 1-March 31, 2008 rate was 9% for tax underpayments and 9% for overpayments. The federal rates were 7%, and Virginia added two percentage points. For calendar-year 2007 estimated-tax…
Could a city require a second BPOL license when a growing service business moved employees to a second city location?
Yes. The second office conducted regular, continuous, nonancillary service activity for more than 30 days, making it a separate definite place of business. The city could require a second license and …
Was electronic catalog data conversion manufacturing for BPOL tax, and could a county default to payroll to situs receipts?
Virginia classified the county operation as a business service, not manufacturing, because it reformatted and indexed data without substantially changing its character and did not sell goods at wholes…
Were maritime-crane modification, repair, and transport activities contracting or a business service for Virginia BPOL tax?
They were business services. The cranes were machines and tangible personal property rather than real-property structures, so modifying and repairing them was not contracting for BPOL purposes. Transp…
What Virginia tax underpayment and refund interest rates applied during the fourth quarter of 2007?
Virginia's October 1-December 31, 2007 rates were 10% for tax underpayments and assessments and 10% for tax overpayments and refunds. Federal rates remained 8%, and Virginia added two percentage point…
Did the BPOL exemption for a title insurance agent cover separate real estate settlement-service receipts unrelated to insurance premiums?
No. The exemption protected title-insurance agency activity tied to the insurance company's direct gross premium income, not the agent's separate settlement and other noninsurance services. Virginia u…
Did occasional short-term rental of an owner's second home owe BPOL tax, and did the Virginia Tax Commissioner decide the transient occupancy tax?
The private-home rental was exempt from BPOL tax. The Tax Commissioner did not decide whether transient occupancy tax was due because that tax fell outside the Commissioner's advisory jurisdiction; th…
What Virginia state and local tax legislation did the Department summarize for the 2007 General Assembly session?
This was a broad historical guide, not a taxpayer-specific ruling. It summarized 2007 legislation involving transportation funding, federal income-tax conformity, filing thresholds and deductions, pas…
Did a retailer's lower appraisal overturn a county's business tangible personal property valuation?
No. The taxpayer and county used accredited appraisers but reached different values because one included capitalized acquisition and installation costs. Appraisals are subjective, and the local assess…
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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.