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 nonresident keep Virginia itemized deductions when supporting records were unavailable and a tax preparer had prepared the return?
No. The taxpayer did not substantiate the itemized deductions after repeated requests, could not show that a claimed package had been received, and said records were lost, destroyed, or unavailable. V…
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…
Did a taxpayer's unsupported claim of another-state residence justify changing Virginia's 2011 income-tax assessment?
No. The taxpayer used a Virginia address on the federal return, had filed Virginia returns before 2011 and again for 2012 and 2013, and supplied no objective evidence of the claimed other-state domici…
Did an overseas job transfer end a couple's Virginia domicile when they kept a Virginia home, vehicles, licenses, and obtained a Virginia divorce?
No. The couple had established Virginia domicile in 2010 and retained a Virginia home, vehicles, licenses, and the wife's presence while the husband worked abroad. A Virginia divorce order also recite…
Could a military member satisfy Virginia's extended-active-duty subtraction when the 90-day period crossed two tax years?
Yes. Virginia said the extended-active-duty period could exceed 90 consecutive days across two tax years; it did not have to exceed 90 days within 2011 alone. But only qualifying basic pay included in…
Did the Servicemembers Civil Relief Act toll Virginia's deadline for a military member's 2007-2008 withholding refund claims?
No. The servicemember filed Forms 763-S in September 2013, after the Virginia refund deadlines for 2007 and 2008. The cited Servicemembers Civil Relief Act provisions deferred collection and tolled co…
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…
Did a second conservation deed create a new easement, or merely reform the original deed so the corrected Land Preservation Tax Credit application could proceed?
It merely reformed the original deed. The second deed reaffirmed the original gift, reasserted its restrictions, and cured defects rather than making a new donation. The appraisal correctly valued the…
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…
Are separately billed hotel parking charges subject to Virginia sales tax when the customer also buys accommodations?
Yes. Parking sold to a customer who also purchased hotel accommodations was an additional charge connected with the room and was taxable, even when billed outside the room revenue. Parking sold by its…
Was a company's March 17, 2015 Form QBA timely for equity issued near the end of its 2014 calendar year?
Yes. Because the calendar-year company issued equity within three months of the end of 2014, its Form QBA deadline was April 1, 2015 under the regulatory exception. Department records showed a March 1…
Was a company's 2014 Form QBA timely when its certified-mail receipt said December 31 but the Department's envelope was postmarked January 2?
No. The Department's original envelope and application showed that the Form QBA was sent by first-class mail with a January 2, 2015 postmark. The company did not show that the special extension for la…
What Virginia tax interest rates applied during the third quarter of 2015?
Virginia's third-quarter 2015 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments in administrative appeals was 0%. Certain local delinquency a…
Under Virginia's 2015 bulletin, when could a semiweekly employer request monthly withholding filing?
Effective July 1, 2015, an employer otherwise subject to semiweekly Virginia withholding could request monthly filing if it had no more than five employees subject to Virginia withholding. The written…
Could Virginia part-year residents claim an out-of-state credit for New Hampshire Business Enterprise Tax paid on the same income?
No. Virginia held that the New Hampshire Business Enterprise Tax was based on enterprise-value expenditures such as compensation, interest, and dividends, rather than income. It therefore was not subs…
Could Virginia extend an expired Land Preservation Tax Credit so a purchaser could claim the remaining 2006 credit in 2012?
No. A Land Preservation Tax Credit earned in 2006 could be carried only through the five following tax years, 2007-2011. Virginia had no statutory authority to add another year or permit use or transf…
Did a West Virginia resident owe Virginia income tax on wages earned while working in Virginia in 2011?
No. Virginia found that the taxpayer had established West Virginia domicile for 2011 despite renewing a Virginia driver's license. Because he was a West Virginia resident earning wages in Virginia, th…
Did Virginia's mining exemption or customers' direct-payment permits protect a contractor's untaxed mine-site purchases from use tax?
No. Virginia upheld the use-tax assessments. Vegetation-control chemicals, power-transmission poles, and protective fencing were not used directly in mining, and customers' direct-payment permits did …
Could Virginia decide which printing-facility property was taxable before the city corrected its machinery-and-tools tax assessments?
Not yet. Virginia did not decide which property was taxable. It remanded the case because the city had acknowledged that some machinery-and-tools tax treatment was wrong but had not corrected the 2010…
Could Virginia residents subtract their full Kansas public-employee pension because Kansas had taxed some plan contributions?
Only in part. Virginia did not allow a subtraction for the entire Kansas pension. The taxpayers could subtract the documented portion attributable to KPERS contributions made after July 1, 1984 that h…
Were cable-television converter boxes taxable as local business tangible personal property in Virginia?
No. Virginia classified the cable-television converters, or set-top boxes, as intangible property exempt from local business tangible personal property tax under Va. Code § 58.1-1101(A)(2)(a). The cas…
Did a granulated drink mix with a Supplement Facts panel qualify for Virginia's reduced food rate, and who owed undercollected tax?
No. Virginia classified the drink mix as a dietary supplement because it carried a Supplement Facts panel, so the full sales-tax rate applied. Because the dealer had charged too little tax on Virginia…
Did nutritional shakes labeled with a Supplement Facts panel qualify for Virginia's reduced sales-tax rate for food?
No. Virginia treated the shakes as dietary supplements because their labels carried Supplement Facts panels, so they did not qualify as food for home consumption and were taxable at the full rate appl…
Were out-of-state domiciliaries who spent more than 183 days in Virginia taxable as Virginia residents in 2010 and 2011?
Yes. Virginia treated the couple as actual residents from February 4 through December 31, 2010 and for all of 2011 because they maintained a Virginia abode and spent 282 and 270 days in Virginia. Thei…
Could an electrical contractor use a city's Form ST-12 or federal energy-grant funding to buy lighting-upgrade materials tax-free?
No. Virginia held that the electrical contractor was the taxable user and consumer of materials installed in city facilities. The city's Form ST-12 could not pass through its government exemption, fed…
Was a 2014 Virginia amended return claiming credit for another state's 2009 assessment filed within the special one-year period?
Unresolved. The normal May 3, 2013 deadline had passed, but Virginia law allowed one year from another state's final determination. Because the record did not establish when that determination became …
Did a death-benefit distribution from a federal pension plan qualify for Virginia's annuity-contract subtraction?
No. Virginia's subtraction required a federally taxable lump-sum death benefit from an annuity contract between a customer and an insurance company. The taxpayer's payment came from a federal pension …
Could a taxpayer avoid Virginia's estimated-tax, extension, and late-payment penalties after filing by October 15 but paying nothing?
No. The taxpayer made no estimated payments, paid nothing by the May 1 original due date, and still paid nothing with the October 2013 return. Virginia upheld the estimated-tax addition, a 12% extensi…
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 …
What result is verifiable from the published order in Karl Edward Beisel v. Virginia Department of Taxation?
The Chesapeake Circuit Court granted the Department's demurrer and dismissed Karl Edward Beisel's case with prejudice in a final, appealable order. The published source says the reasons were in an Apr…
Could an out-of-state capital loss make a Virginia nonresident's income apportionment factor equal 100%?
Yes. In the ruling's example, a $200 out-of-state capital loss reduced income from all sources but not Virginia-source income. With both the numerator and denominator at $500, the nonresident apportio…
Was a marital-trust remainder exempt from Virginia's postponed inheritance tax when no Virginia estate tax was actually paid?
No. Virginia held that the marital-trust remainder was not exempt from postponed inheritance tax because no Virginia estate tax was actually imposed and paid after the estate tax became effectively re…
Was an 18% mandatory banquet gratuity excluded from Virginia's taxable sales price even though 3% was kept as a house gratuity?
Yes. Virginia held that the entire 18% mandatory gratuity was excluded from taxable sales price because it did not exceed 20% of the meal price. The 3% house share did not make the lump-sum charge tax…
When must an out-of-state investment pass-through entity file in Virginia and withhold for nonresident owners?
A pass-through with no Virginia business or source income did not file or withhold merely because its investment manager worked in Virginia but was not on its payroll. A second entity investing in an …
Did moving to another state for full-time work end a taxpayer's Virginia domicile when his family and major ties remained in Virginia?
No. Virginia held that the taxpayer had not abandoned his Virginia domicile. Although he worked, leased a home, registered a vehicle, and held a license in another state, his family and home remained …
Could Virginia residents claim an out-of-state tax credit for the District of Columbia Unincorporated Business Franchise Tax?
No. Virginia held that the District of Columbia Unincorporated Business Franchise Tax was a franchise tax, not an income tax similar to Virginia's individual income tax. The residents' 2013 credit was…
Could Virginia residents claim a Virginia credit for California tax on California wages when California law offered the reciprocal credit?
Generally no. Virginia denied the credit because California law ordinarily allows the Virginia resident to claim the reciprocal credit on the California nonresident return. The couple's California ret…
Could taxpayers apply a claimed 2008 Virginia overpayment to 2009 tax when their first 2008 return was filed in June 2014?
No. Applying an overpayment to another year's liability was subject to the same deadline as a refund. The 2008 return was due May 1, 2009 but was not filed until June 17, 2014, so Virginia denied the …
Were tumor-treating-field cancer therapy devices exempt from Virginia sales tax as durable medical equipment?
Yes, when purchased by or on behalf of a specific individual. Virginia found the tumor-treating-field devices qualified as durable medical equipment. Bulk sales or leases to for-profit hospitals, phys…
Could a Virginia county obtain reconsideration of an M&T tax decision when it filed its request after the 45-day deadline?
No. The prior determination was dated January 8, 2015, making the adjusted 45-day deadline February 23 because February 22 was a Sunday. The county did not file until March 10, so Virginia could not r…
Was a taxpayer who moved out for permanent work and returned to Virginia in May 2011 a full-year or part-year resident?
Part-year resident. Virginia found that the taxpayer had abandoned Virginia domicile before 2011 and did not become a Virginia resident again until he returned in May. His submitted part-year return w…
Which dealers had to make Virginia's accelerated sales-tax payments in June 2015 and 2016, and how did payment and reconciliation work?
For June 2015 and June 2016, a dealer with at least $2.5 million of taxable sales or purchases in the prior fiscal year generally had to prepay 90% of the previous June's sales-and-use-tax liability, …
Did pilot-line equipment qualify for Virginia's R&D sales-tax exemption when it was also used for quality control and customer-specific work?
No. Although the technical center performed qualifying research, the same pilot-line equipment also supported quality control, customer-specific modifications, cost reduction, and competitor analysis.…
Could a Virginia seller reduce an audit assessment with valid customer exemption certificates obtained after the audit began?
Yes. Certificates obtained after an audit begins are not accepted as having been taken in good faith and receive greater scrutiny, but Virginia found the submitted customer certificates valid and sent…
Did installed bowling lanes, pinsetters, ball returns, and scoring equipment become real-property fixtures for Virginia sales-tax purposes?
Yes. Virginia found the bowling equipment became part of the real property after installation. It was annexed to the premises, adapted to the bowling-alley use, and intended to remain. The contractor …
Could Virginia devalue a land-preservation credit carryforward when the original 2008-2009 assessment periods had expired?
Yes, for the unused carryforward. Virginia could not assess the owners' closed 2008 and 2009 returns, but it could reduce remaining credit and assess later open years. It accepted the Department's $26…
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…
Did a federal extension give a taxpayer until July 2014 to file an original 2010 Virginia return claiming a refund?
No. Because the taxpayer did not file the original Virginia return by the extended due date, the Virginia extension was negated and the refund period ran from the original May 2, 2011 due date. The Ju…
Could Virginia residents subtract all CSRS pension payments because their contributions had already been taxed federally and by Delaware?
No. Virginia's subtraction required contributions that were deductible federally but taxed by another state. The husband's CSRS contributions had been taxed federally, so their basis was already recov…
Did a couple establish another-state domicile in 2011 even though they returned to Virginia that November and one retained a Virginia license?
Yes. The husband changed domicile in February 2011 and the wife in March after the couple sold their Virginia home, bought a home in another state, moved vehicles, registered to vote, and obtained lic…
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 worker entitled to refunds when her employer withheld Virginia tax after she abandoned Virginia domicile for a foreign assignment?
Yes. Virginia found that the worker abandoned her Virginia domicile and established domicile in another country before 2010. Her employer had incorrectly withheld Virginia tax, and her timely nonresid…
Was a military spouse working in Virginia in 2008 a resident, or a nonresident taxable only on Virginia-source wages?
Nonresident. Virginia found that the military spouse had not abandoned his other-state domicile and spent no more than 183 days in Virginia. He still owed Virginia tax on wages earned from Virginia em…
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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.