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 result is verifiable from the published order in Timothy S. Hunt v. Commonwealth of Virginia?
The Norfolk Circuit Court held that sovereign immunity prevented it from hearing the requested declaratory-judgment action. It sustained the Commonwealth's demurrer without leave to amend and dismisse…
Could a manufacturer force machinery revaluation using depreciation schedules while refusing the county's requested federal and Virginia returns?
Not yet. The county could require complete tax returns and schedules to verify original capitalized cost, and the manufacturer's depreciation schedules were insufficient. Virginia found the denial pro…
Did a taxpayer living abroad remain a Virginia resident in 2009 because she kept a Virginia license and voter registration?
No. After weighing all evidence, Virginia found that the taxpayer abandoned her Virginia domicile and established domicile in another country by 2005. Selling her Virginia home and vehicle and living …
Was a hotel's full contract charge for canceled rooms and meals taxable when the agreement labeled it liquidated damages plus applicable taxes?
Yes. The customer remained obligated to pay 100% of the contracted rooms, food, and beverages as liquidated damages plus applicable taxes. Virginia treated the balance, after credit for services the c…
Who collected Virginia tax when an out-of-state consignor sold goods for resale to a separate online seller that lacked Virginia nexus?
Under the 2014 facts, neither company collected tax on the retail sale. X did not sell to Virginia consumers and was not a Virginia dealer; Y made the consumer sale but had no Virginia nexus. Y should…
Did periodic moves to another state, without a permanent home or steady job there, establish a new domicile outside Virginia for 2009?
No. The taxpayer moved between Virginia and State A as employment required, but did not establish a permanent abode, steady employment, or significant State A ties beyond a vehicle registration. Her V…
Did a couple living in their out-of-state home for medical treatment reestablish Virginia domicile because they owned a Virginia townhouse and used its address?
No. The couple moved into their State A home in 2009 so the husband could receive nearby hospital treatment. Although they owned Virginia property, registered two children's vehicles there, and used a…
Did unsupported factual disagreements and previously requested but unproduced records justify reconsidering Virginia's 2005-2010 income-tax assessments?
No. The taxpayer did not satisfy a reconsideration ground or provide new documentation supporting nonresidency or disputing Virginia-source income. State A records contradicted his license claim, he r…
Did a timely appeal of a foreign-source-income adjustment preserve unrelated audit issues that were first raised more than 90 days after assessment?
No. The original timely appeal challenged only the foreign-source-income subtraction. Because the taxpayer did not identify the other alleged audit errors within 90 days of the December 2011 assessmen…
Could a corporation obtain administrative relief after appealing Virginia corporate-income-tax assessments beyond the 90-day deadline?
No administrative appeal relief was available because the corporation filed on March 28, 2014, after both 90-day deadlines, and it did not identify an assessment error. Virginia instead gave it 30 day…
Could Virginia residents claim credit for Pennsylvania tax on an independent-contractor honorarium for teaching a university course abroad?
Only if the couple was actually liable for Pennsylvania tax. The husband appeared to be an independent contractor, so the honorarium was not employee compensation covered by reciprocity. But because h…
Did Virginia apply a Fairfax County circuit-court ISP equipment exemption statewide, and which purchases qualified for a refund?
No. Virginia continued to construe the ISP equipment exemption narrowly and declined to apply the Fairfax County Cisco decision statewide. It allowed a refund, with interest, only for equipment the au…
Did Virginia communications tax and the Internet Tax Freedom Act exempt activation fees for mobile plans providing only Internet access?
No. Internet access itself was not taxed, but Virginia treated activation and connectivity as separate taxable communications services. The Department also found that connectivity was not an incidenta…
Were Internet reactivation charges taxable, were cable rights-of-way fees payable to Virginia, and could a missed-return penalty be waived?
Virginia upheld all three audit issues. Internet reactivation charges were taxable communications services even though Internet access itself was not taxed; the cable operator had to remit its rights-…
Did a telecom repair pricing agreement qualify for the rule taxing only half of a parts-and-labor maintenance contract?
No. The agreement set prices for optional repair and replacement transactions but imposed no predetermined fee or total charge when signed. It was a pricing agreement, not a qualifying maintenance con…
Did a telecom repair pricing agreement qualify for the rule taxing only half of a parts-and-labor maintenance contract?
No. The agreement set prices for optional repair and replacement transactions but imposed no predetermined fee or total charge when signed. It was a pricing agreement, not a qualifying maintenance con…
Did Virginia sales tax remain due on the remaining payments under a noncancellable equipment lease after the customer returned the equipment early?
Yes. The four-year lease was noncancellable and required payment despite dissatisfaction. Returning the equipment after one year did not eliminate the remaining gross proceeds, so the out-of-state les…
What did Virginia's 2014 Tobacco Products Tax guidelines require, and what penalties applied to intentionally untaxed products?
The 2014 guidelines required covered distributors to be licensed, pay the Tobacco Products Tax when products were sold in Virginia, file monthly Form TT-8 returns even when no tax was due, and keep de…
Could buyers of transferred Virginia Land Preservation Tax Credits protect a refund claim while litigation challenged the Department's easement valuation?
Potentially. Virginia did not reverse the Department's lower conservation-easement valuation. Because litigation was pending over that valuation, the taxpayers could consider a protective claim under …
Could a military spouse claim another state's domicile and Virginia withholding refunds when residence and intent were not established at the same time?
No. The spouse lived in State B only from July through September 2008, while vehicle registrations and voter registration occurred later. Because personal presence and intent to make State B a permane…
Did Virginia's automatic six-month extension preserve a 2008 refund when the taxpayers did not file the original return until October 2012?
No. Because the taxpayers did not file the original 2008 return by the extended due date, the extension was negated and the timely-filing date reverted to May 1, 2009. Their three-year refund period e…
Was propane used to heat migrant-worker housing exempt as agricultural production, and were movable tobacco-curing barns taxable?
The housing propane was taxable because worker comfort and personal needs were not agricultural production for market. By contrast, movable tobacco-curing barns placed on concrete pads remained tangib…
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…
Did a pending IRS reconsideration prevent Virginia from assessing 2005 tax when the taxpayer had not filed a Virginia return?
No. Virginia used the IRS information then available after finding no 2005 Virginia return on file. The return later submitted did not match the federal adjustment, and the Department would not look b…
Did an IRS reconsideration request stop Virginia from assessing tax based on the IRS's existing 2007 audit adjustment?
No. Virginia used the IRS information then available and did not look behind the federal audit determination merely because reconsideration was pending. The assessment remained payable. If the IRS lat…
Could taxpayers defeat a Virginia assessment by saying their 2006 return was e-filed when they had no confirmation number or proof of payment?
No, not on the submitted evidence. Virginia had no record of the return, and the taxpayers kept neither the e-file confirmation number nor proof of payment. The no-return rule allowed assessment at an…
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…
What annual caps applied to Virginia's Qualified Equity and Subordinated Debt Investments Tax Credit through 2014?
The bulletin listed annual caps of $3 million for 2005-2009, $5 million for 2010, $3 million for 2011, $4 million for 2012, $4.5 million for 2013, and $5 million for 2014. It said the $5 million statu…
Could a grocery store replace Virginia's two-day estimated sales-tax audit with revised EBT schedules when it lacked records of gross food sales?
Not yet. The store's inadequate records allowed Virginia to estimate taxable sales from a two-day observation period the store had accepted. EBT records could support revised exempt sales, but they di…
Were chemicals used between printing-ink production runs exempt as supplies used directly in manufacturing?
No. Although cleaning prevented color contamination and protected product quality, the chemicals were used only after one ink run stopped and before the next began. Because they were not actively and …
Could taxpayers overturn old Virginia assessments by claiming that only government employees and seamen were subject to income tax?
No. The administrative appeals for 2006 and 2008-2012 were filed beyond 90 days, and the paid 2007 assessment's refund claim missed its separate three-year deadline. Virginia also stated that the argu…
Did survivor-annuity payments from a federal retirement plan qualify for Virginia's annuity death-benefit subtraction?
No. Virginia limited the subtraction to a federally taxable lump-sum death benefit from an annuity contract between a customer and an insurance company. The taxpayer's survivor payments came from a fe…
Could a county reject a poultry processor's manufacturer classification for 2006-2009 solely because supporting documents arrived after an initial 45-day period?
No final classification was made. Virginia found the taxpayer made a good-faith effort within the original 45 days, while the county specified needed records only afterward and then ignored the additi…
Was an appeal complete when a taxpayer mentioned an IRS dispute and challenged penalties and interest but identified no error, facts, or legal authority?
No. The taxpayer's letter did not identify an alleged assessment error, relevant facts, grounds for relief, or controlling authority, so it was not a complete appeal. The 2012 assessment based on tax …
Could an employee subtract his own Form W-2 wages under Virginia's federal jobs-credit or Work Opportunity Credit subtraction?
No. The subtraction was designed for an employer whose federal wage deduction was reduced because the same wages generated the federal Work Opportunity Credit. The taxpayer neither incurred employer w…
Could a taxpayer abate Virginia's 2009 assessment by producing only a State A return showing residence there for the first six months?
Not on that record. A State A return showing residence there for the first six months did not establish that Virginia domicile had been abandoned or quantify the correct liability. Because the taxpaye…
Did a federally taxable survivor benefit from a federal retirement plan qualify for Virginia's annuity death-benefit subtraction?
No. Virginia required a federally taxable lump-sum death benefit from an annuity contract between a customer and an insurance company. The wife's benefit came from a federal retirement plan, so it fai…
Which sales and equipment purchases did Virginia remove from a packaged-concrete manufacturer's sales/use-tax audit?
Virginia granted partial relief. It removed one qualifying underground-mine project sale for this audit, an exempt label machine, a server first used and taxed in another state, and replacement compre…
Which furniture-manufacturing, advertising, certificate, and penalty items did Virginia change in a sales/use-tax audit?
Virginia ordered a partial audit revision. It removed a valid resale sale, certified pollution-control filters, direct out-of-state shipments, and qualifying printed materials; it kept invalid carrier…
Did a federal employee remain domiciled in another state after settling with his family and conducting his affairs in Virginia?
No. The taxpayer's declaration of State A domicile was outweighed by his conduct: he had not lived there since 1999, documented no continuing ties, and instead maintained a family home, driver's licen…
Could a separate tobacco packaging-and-shipping service buy cartons, paper, chipboard, and strapping under Virginia's manufacturing exemption?
No. The service provider did not process or change the tobacco and performed handling, storage, packaging, and shipping away from the manufacturer's plant. It was therefore the consumer of its cartons…
Did a retiree who kept homes in two states become domiciled in Virginia after renewing a Virginia driver's license and maintaining vehicles there?
Yes. After weighing all evidence, Virginia found the taxpayer changed domicile to Virginia in 2007. Renewing a Virginia driver's license, relinquishing the other state's license, allowing most registr…
How did Virginia classify selected lip, acne, earwax, fiber, mouthwash, medical, beverage, propane, and coupon products for sales tax?
Virginia issued a product matrix. Acne medicine, Debrox, antiseptic mouthwash, qualifying heating pads and ice bags, domestic propane exchanges, and entertainment coupon books were exempt. Several bal…
Did reusable fabric sandwich and snack bags qualify as lunch boxes during Virginia's school-supplies sales-tax holiday?
No. The holiday guidelines used an all-inclusive list of qualifying school supplies. Lunch boxes were listed, but reusable fabric bags that held only sandwiches were more like ordinary plastic sandwic…
Could accountant error or financial hardship extend Virginia's deadline for claiming a refund on a late 2006 return?
No. The refund deadline expired May 3, 2010, but the original 2006 return was not filed until January 2013. Virginia had no discretion to extend the three-year period for accountant error or financial…
Was a Virginia appeal timely when the assessment went to the IRS-reported last known address and the taxpayer learned of it later?
No. Virginia treated the assessment as made when it was mailed to the last known address supplied through IRS information, so the March 26, 2013 appeal missed the February 5 deadline. The merits appea…
What Virginia state and local tax legislation did the Department summarize for the 2014 General Assembly and Special Session I?
This Department guide summarizes state and local tax legislation enacted during Virginia's 2014 General Assembly and Special Session I through July 1, 2014. It covers administration, income tax, tobac…
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…
Could a technology company remove audited use-tax purchases using representative invoices and unclear service agreements?
Only partly. Virginia removed a documented $35 item and conditionally removed two invoices showing sales tax paid. But representative invoices, emails, and claims about electronic delivery did not pro…
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…
Did Virginia violate a transferee's taxpayer rights or miss the assessment deadline when it reduced a transferred Land Preservation Tax Credit?
No. Virginia upheld the assessment. The credit-award letter warned that the conservation-easement value remained subject to audit and adjustment, the Department gave notice and appeal opportunities, a…
Did Virginia's ISP equipment exemption cover assets used for wholesale Internet service and web hosting as well as retail Internet access?
Only in part. Assets used in Fairfax County could qualify for the ISP exemption for retail or wholesale Internet service under a county circuit-court decision. Outside Fairfax, Virginia continued to d…
Could a federal construction contractor and its subcontractor buy freestanding office furniture tax-free for resale to the agency?
Yes. Modular panels, freestanding furniture, chairs, shelving, file cabinets, power strips, and similar items that would not be incorporated into or permanently affixed to the building could be bought…
Did exterior light-box signs installed by a tenant become real-property fixtures rather than property subject to Virginia local BTPP tax?
No. Virginia upheld the county's classification of the entire light-box signage as taxable business tangible personal property. Although attached to the building, the boxes were not essential to the d…
What Virginia tax interest rates applied during the third quarter of 2014?
Virginia's third-quarter 2014 rate was 5% for both tax underpayments and overpayments. The reduced rate for a qualifying assessment still unresolved nine months after assessment was 0%. The bulletin a…
Could a contractor buy modular buildings tax-free because it installed them for a federal agency under a government contract?
No. The contractor installed modular buildings as real-property construction and was the consumer of the materials, even though title passed to a federal agency and the agency supplied an exemption ce…
Could a Virginia domiciliary avoid Virginia tax on another state's pension because he lived there more than 183 days and filed returns there?
No. The taxpayer remained domiciled in Virginia, so Virginia could tax all of his retirement income even though he spent more than 183 days and filed resident returns in another state. A credit might …
How should a combined Virginia corporate group report Coalfield Employment Enhancement Tax Credits used against its income-tax liability?
The credits were not refunds or overpayment credits eligible for Virginia's income subtraction because they were fully used against current combined tax. Instead, they reduced the affiliate's deductib…
Did a military spouse qualify for Virginia nonresident withholding relief by sharing the service member's domicile in another state?
Yes. The preponderance of evidence showed that the taxpayer and active-duty spouse had established and maintained domicile in the same other state. Their legal-residence certificate, vehicle registrat…
Could Virginia residents avoid a 2008 assessment based on an IRS income adjustment by arguing they had not pledged income or contracted with the Department?
No. Virginia starts with federal adjusted gross income, and the IRS reported that the couple had underreported it. They supplied no objective evidence that the federal information was wrong, and argum…
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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.