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 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…
Did an Acute Care Expense Limitation pricing arrangement prevent patient-specific specialty-bed leases from being exempt?
No. Although the supplier used an Acute Care Expense Limitation program and maintained a bulk inventory, physician work orders named the patients and monthly invoices tracked the beds and days of use.…
Were specialty beds leased under a flat CAP pricing program exempt when physician records identified each patient?
Yes. The supplier's flat CAP pricing and bulk inventory did not control the exemption. Licensed physicians issued work orders naming the patients, and monthly lease records tracked the beds and patien…
Did CAP pricing and supplier inventory prevent specialty-bed leases from qualifying as patient-specific exempt equipment?
No. The flat CAP pricing method and supplier-owned bulk inventory did not defeat the exemption because physician work orders and lease records tied the specialty beds to specific patients. Virginia re…
Did a hospital's specialty beds remain patient-specific exempt equipment under a flat monthly CAP pricing program?
Yes, when the hospital documented the specific patient. The supplier's flat CAP pricing and bulk inventory did not defeat the durable-medical-equipment exemption because physician work orders named pa…
When were a dental supplier's sales of durable medical equipment exempt as patient-specific purchases?
Virginia granted relief only for documented patient-specific items. Dental prosthetic devices and other qualifying durable medical equipment were exempt when purchased on behalf of a named individual,…
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…
What annual caps applied to Virginia's Qualified Equity and Subordinated Debt Investments Tax Credit in 2013 and 2014?
The annual cap was $4.5 million for taxable year 2013 and $5 million for 2014. The statute generally capped the credit at $5 million, but budget actions had imposed lower limits in several years. Tax …
What was Virginia's Land Preservation Tax Credit cap for calendar year 2013 after House Bill 1398?
The cap was $100 million. House Bill 1398 removed the inflation adjustment beginning in 2013, reducing the previously announced 2013 cap of $113,909,000. The law also stopped adding reissued credits t…
Could a federal firearms-training contractor buy weapons and ammunition tax-free because title passed to the government?
Generally no. The true object of each instructors-and-equipment line item was firearms training, not government acquisition of weapons, so the contractor was the taxable consumer even when title passe…
Could part-year Virginia residents claim a prorated state standard deduction after itemizing on their federal return?
No. Because the couple elected to itemize deductions on their 2010 federal return, Virginia law required them to itemize on their Virginia part-year return too. They could not use a prorated Virginia …
What items and transactions qualified under Virginia's 2013 Hurricane Preparedness Sales Tax Holiday guidelines?
During the historical May 25-31 holiday, qualifying hurricane-preparedness items priced at $60 or less and portable generators priced at $1,000 or less were exempt. The guide covered discounts, layawa…
Could a town receive a Communications Sales and Use Tax Trust Fund share after missing the original 2006 certification deadline?
Yes. The town had missed the original certification deadline, but later law allowed a Department ruling to adjust fund distributions. Communications-provider records, town records, and bank statements…
How did Virginia tax a leased drill and equipment transferred between commonly owned businesses?
Virginia adjusted the drill assessment to include only untaxed lease payments made during the audit period because the equipment was leased, not owned. It upheld use tax on equipment bought from a sep…
Could a dental supplier remove durable medical equipment from an audit before documenting the specific patients?
No, not without records. Virginia's dental-equipment exemption required proof that each item was purchased by or on behalf of a specific patient, while bulk purchases remained taxable. Because the sel…
Which CAP-program specialty-bed leases qualified for Virginia's patient-specific medical-equipment exemption?
Leases supported by patient information qualified; three unsupported invoices did not yet. CAP pricing and supplier inventory did not defeat the exemption because physician work orders and lease recor…
Could a drilling contractor overturn a consumer use-tax sample because a new business line caused many untaxed purchases?
Not as to the sample. Virginia found the one-year purchase sample representative because the new activity's remaining exceptions were normal recurring purchases and the contractor had not supplied the…
Did a multi-year work assignment and resident return in another state end a worker's Virginia domicile?
No. Although he lived and filed as a resident in the work state, the assignment appeared temporary and he kept a Virginia home available for his use, voted in Virginia, renewed a Virginia driver's lic…
Could part-year Virginia residents claim a credit for tax paid to the state where they lived later in the same year?
No for income earned while they lived in the other state. That income was not subject to Virginia tax and therefore did not qualify for Virginia's other-state credit. The couple also failed to identif…
Which drink-packaging and bar-coding equipment counted as taxable manufacturing machinery rather than exempt logistics equipment?
Equipment forming the retail package counted as manufacturing; later shipping and logistics equipment did not. Six-packs for Drink Mix 1 and ten-packs for Drink Mix 2 met consumer product standards an…
When did certified pollution-control equipment become exempt from Virginia local business property tax?
For tax years beginning on or after January 1, 2011, properly certified pollution-control property was exempt from local taxation. Earlier years depended on the locality's ordinance; without a local e…
Which dealers had to make Virginia's June 2013 accelerated sales-tax payment, and how was it calculated?
Dealers with at least $26 million of taxable sales or purchases during the prior July-June fiscal year generally had to pay 90% of their June 2012 sales-and-use-tax liability as an accelerated June 20…
Was a corporate vice president personally liable when the company failed to remit employee withholding taxes?
Yes. The officer knew of the unpaid withholding while the company continued operating and provided no objective evidence that he lacked authority to prevent the failure. An IRS decision not to hold hi…
Were per-program streamed and downloaded video sales subject to Virginia communications or retail sales tax?
No. Virginia treated the seller's streamed and downloaded video as digital products delivered electronically, excluded from the communications tax whether the customer received a permanent or time-lim…
Was a deed of trust securing a federal land credit association's loan exempt from Virginia recordation tax?
Yes. Federal law exempted the federally chartered land credit association and its mortgage instruments from state and local taxation other than real-property tax. Because Virginia's recordation tax is…
Can Virginia Public Document 13-57 still be used as the Department's 2013 sales-tax-change guidance?
No. Virginia's official page states that P.D. 13-57 was superseded by revised Guidelines issued as P.D. 13-103 on June 14, 2013. The revision followed legal advice that the additional 0.7% Northern Vi…
Did registering to vote in another state change domicile when the taxpayer remained physically overseas?
No. The taxpayer registered to vote in another state but spent 2008 abroad and provided no evidence that he was physically present in the claimed state during 2008 or 2009. Because a new domicile requ…
Did living in another state for 2008 end Virginia domicile, and could the taxpayer claim credit for that state's tax?
Virginia found that the taxpayer remained domiciled in Virginia because she kept stronger permanent ties here, including a Virginia vehicle and a license renewed in October 2008, even though she lived…
Who had to report door-to-door frozen-food sales, and was the company's 3% payment-processing fee taxable?
The distributors were independent contractors selling on consignment, but Virginia could still require the registered food company to report and remit tax on their door-to-door sales. The company had …
Did Virginia reverse local property-tax assessments based on revised fixed-asset schedules?
No. Virginia found no basis to change its earlier decision because the business still had to give the city adequate records proving which assets were replaced, obsolete, or absent on each tax date. Wi…
Were vehicles taxable in Virginia when a Virginia dealer prepared them before out-of-state delivery?
No. The vehicles qualified for Virginia's interstate-commerce exemption because the manufacturer retained title under FOB-destination terms until delivery to the out-of-state hospital. The Virginia de…
When were software modifications, maintenance, upgrades, and training exempt from Virginia sales tax?
Separately stated labor to modify prewritten software was exempt even if delivered on tangible media. Maintenance and upgrades were exempt only when agreements and verifiable records established elect…
Could a worker claim Virginia's disability-income subtraction while performing competitive paid work?
No. Virginia denied the subtraction for 2008-2010 because the taxpayer regularly performed competitive service-industry work at minimum wage, which constituted substantial gainful activity. The fact t…
Could Virginia collect a corporation's unpaid income tax personally from its president after an asset sale?
Yes. Virginia upheld the converted assessment against the corporation's president because he knew the asset sale would produce a substantial taxable gain, had authority over the transaction, and faile…
Could the post-merger Virginia group switch from combined to consolidated corporate returns?
No. Virginia held that the merger-of-equals election policy did not apply because one side had only a single Virginia-taxable subsidiary, not an affiliated Virginia group. That subsidiary joined the e…
Were removable data-center equipment and claimed application switches exempt from local BTPP tax?
No. Virginia upheld local BTPP tax on backup generators, modular data-center equipment, transformers, and switchgear because the lease treated them as removable property owned by the operator. The ope…
Were medical gases and argon used in cryosurgery exempt from Virginia sales tax?
Qualifying prescription medical gases could be sold exempt to specified licensed practitioners and medical facilities with supporting documentation. Argon used in cryosurgery was taxable because the F…
Could a contractor remove untaxed purchases and penalties from its Virginia use-tax audit?
Not on the records submitted. Virginia found that the contractor's proof did not reconcile to four audited purchases, but allowed 45 days for corrected documentation. It upheld the compliance penalty …
Did the taxpayer prove that she had abandoned Virginia domicile during 2008?
Yes. Virginia abated the 2008 assessment because the taxpayer's employment, resident income-tax filing, voter registration, and other evidence showed that she established domicile in another state and…
Did equipment used after treated water entered storage qualify for Virginia's processing exemption?
No. Virginia held that water became a finished product when it left processing and entered the storage tank. Equipment and testing used during later transmission to customers were taxable distribution…
Did tax paid by a REIT lessor when buying hotel property eliminate tax on leases to hotel operators?
No. Virginia held that leases of the hotel furniture, fixtures, and equipment were taxable and that the tax was the lessees' legal debt, even though the lessor claimed it paid tax when buying the prop…
Could a Virginia retailer remove audited assets when Virginia or another state's tax was already paid?
Yes. Virginia reviewed the retailer's invoices and removed ten amounts from the Asset Exceptions list because Virginia use tax or another state's similar sales tax had already been paid. The audit wou…
Was the entire portable-toilet rental and servicing charge taxable in Virginia?
Yes. Virginia treated the portable toilet as the true object and waste-removal service as incidental, making the entire charge taxable. The administrative appeal was also filed two days after the 90-d…
Could two one-time lead-lined drywall purchases be projected across the full audit period?
No for this audit period. Virginia found that the two untaxed lead-lined drywall purchases were isolated specialty purchases outside the contractor's normal business. The contractor accepted and paid …
Could an online seller exclude charges labeled shipping and handling from Virginia sales tax?
Only with adequate proof that the charges were separately stated transportation-out and contained no handling. The seller's spreadsheet labeled them shipping and handling, and its sample invoice fell …
Could an online seller exclude charges labeled shipping and handling from Virginia sales tax?
Only with adequate proof that the charges were separately stated transportation-out and contained no handling. The seller's spreadsheet labeled them shipping and handling, and its sample invoice fell …
Did overseas foreign-service assignments prove that a couple had ended Virginia domicile?
Not on the facts presented. Virginia said the couple likely became Virginia domiciliaries during 2004-2007. Although they took substantial steps to abandon Virginia when moving overseas, they showed n…
Could an auto-parts seller keep submitting exemption certificates after a four-year audit review?
No. Virginia upheld the remaining assessment after the seller received at least six information requests over four years. Certificates were missing, incomplete, dated after the sales, or did not cover…
Did Virginia's temporary-storage exemption cover materials fabricated here for an out-of-state government project?
No. The subcontractor was the taxable user and consumer of materials it fabricated in Virginia into property installed in an out-of-state building. The materials were not merely stored in Virginia pen…
Could a hotel replace Virginia's sample assessment with a detailed audit of one customer's sales?
No. Virginia upheld the sample because the customer's recurring lodging purchases were taxable and formed a consistent part of the hotel's normal business, not isolated transactions. The customer was …
Which nonprescription drugs and proprietary medicines qualified for Virginia's sales-tax exemption?
A product qualified when it was a nonprescription drug or proprietary medicine, was sold for internal or topical use, and was intended to cure, mitigate, treat, or prevent human disease. Cosmetics, gr…
Did prototype production make the taxpayer a manufacturer exempt from local BPOL tax?
Not on the record presented. Production for end use can be manufacturing, but prototypes made to advance research and development are business services. After inspecting facilities, contracts, and inv…
Were welding fabrication and repair-part charges taxable even when the welder paid suppliers tax?
Yes. Welding that changed property into a different form was taxable fabrication, and separately stated repair parts were taxable retail sales; lump-sum repair charges including parts were fully taxab…
Who bore the tax when a purchased Virginia land-preservation credit was later reduced?
The credit purchasers remained liable to Virginia after the donor and Department agreed to a lower conservation-easement value. Their good-faith purchase and private indemnification agreement did not …
Could a part-year Virginia couple claim credit for tax on wages excluded from Virginia income?
No. The wife earned and was taxed on the wages while she was a resident of the other state, so Virginia's part-year rule barred the credit for that period. The couple also excluded those wages from Vi…
What Virginia tax interest rates applied during the second quarter of 2013?
Virginia's second-quarter 2013 rates remained 5% for tax underpayments and 5% for overpayments. The reduced rate for a qualifying assessment under administrative appeal was 0% after nine months until …
When could two bone-repair medical devices be sold exempt from Virginia sales tax?
Device B could be sold exempt when purchased specifically for an identified patient's use, but bulk purchases were taxable. Device A required FDA Class III approval before receiving the same treatment…
Did a 2012 retailer classification automatically entitle an equipment broker to earlier BPOL refunds?
No automatic refund followed. Claims before 2009 were time-barred. For 2009-2011, Virginia remanded because both sides relied mainly on the taxpayer's self-descriptions rather than evidence of its act…
Could spouses claim $100,000 of land-preservation credit when only the husband donated the easement?
No. Only the husband appeared on the easement deed and credit application, so only he earned the land-preservation credit. Marital funds did not make the wife a donor, and no credit had been transferr…
How could a Virginia manufacturer average full-time employees for the single-sales-factor election?
A manufacturer could use a mean, median, or mode based on employee counts that represent the entire taxable year, and it could change methods from year to year. It could not use only the last day's he…
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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.