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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Was a specialty vehicle exempt from Virginia retail sales tax when a broker-arranged carrier picked it up in Virginia and delivered it out of state?
Yes. The ordinary Virginia motor-vehicle retail-tax exemption did not apply because the vehicle was not titled in Virginia and Virginia motor-vehicle sales tax was not paid. But the manufacturer docum…
What annual caps and proration factors applied to Virginia's Qualified Equity and Subordinated Debt Investments Tax Credit for 2011-2013?
For taxable year 2011, the cap was reduced from the $5 million statutory amount to $3 million. Because taxpayers requested $8.09 million, Virginia prorated commercialization-investment credits to 52.6…
Could a Virginia resident defeat a 2005 nonfiler assessment by arguing that IRS data sharing was illegal and that his income was not federal adjusted gross income?
No. Virginia law required a resident with taxable income to file, and federal law authorized the Department to receive IRS return information under its written coordination agreement. The taxpayer did…
Could a retired service member claim Virginia's military-spouse income-tax protection without sharing the active-duty spouse's out-of-state domicile?
No. The Servicemembers Civil Relief Act protection required the spouse claiming exemption and the active-duty service member to share the same domicile. The claimant showed intent to adopt another sta…
Did a packaging wholesaler's machine qualify for Virginia's manufacturing exemption because it folded corrugated cardboard into self-locking boxes?
No. Virginia accepted that erecting self-locking boxes could be processing, but the exemption required industrial processing as the business's primary activity. The company was classified as a packagi…
Did manufacturing-execution software, wireless inventory scanners, and their maintenance contract qualify for Virginia's direct-use manufacturing exemption?
No. The MES software collected and processed production data for inventory control but did not operate equipment or control product quality, making it a taxable administrative tool. The wireless gun s…
Could a Virginia resident avoid a 2007 assessment by refusing to report an IRS audit increase and claiming he had no federally taxable activity?
No. A taxpayer had one year after the final federal change to file an amended Virginia return. Because this taxpayer did not report the IRS increase, Virginia could assess the resulting tax at any tim…
Did a Virginia advertising franchise owe tax on an in-state printer's full charge for printing, inserting, and mailing direct-mail advertisements?
Yes. The franchise provided exempt professional advertising services to its Virginia customers, but as an advertising business it was the taxable user of the printed direct-mail materials. Because its…
Did Virginia finally uphold a 2008 residency assessment when a former service member claimed another domicile but supplied no supporting evidence?
Not finally. The taxpayer had not answered two Department requests or provided objective evidence supporting his claimed out-of-state domicile, so Virginia had no basis to revise the presumptively cor…
Could financial hardship excuse a 2007 Virginia refund return filed more than six months after the three-year deadline?
No. The original 2007 return had to be filed within three years of its due date to claim a refund, making the deadline May 2, 2011 because May 1 fell on a Sunday. The taxpayer filed on November 11, 20…
Did Virginia finally uphold a 2008 residency assessment against a student who lived in two other states but kept a Virginia driver's license?
Not finally. The student said she lived and attended college in two other states and paid tax there, but provided no supporting records despite two information requests. Her Virginia driver's license,…
Did evidence that eliminated a 2008 Virginia residency assessment also prove the taxpayer was not domiciled in Virginia during 2007?
No. Virginia had already abated the 2008 assessment based on additional evidence, but the 2007 record was different: the employer attributed all wages and withholding to Virginia, federal tax document…
Did Virginia's airline exemption cover cargo trucks, sorting equipment, repair assets, and other property in an integrated air-and-ground delivery network?
Partly. The scheduled cargo airline qualified for the exemption, and Virginia extended it to property directly and principally used in its integrated air-and-ground common-carrier service, including c…
Could a Virginia resident claim a state credit for foreign tax withheld from mutual-fund investment income?
No. Virginia's ordinary resident credit applied to qualifying income tax paid to another U.S. state, not to a foreign country. A separate foreign-country credit covered pension or retirement income de…
Could a Virginia resident subtract annuity-surrender gain because he borrowed the money before moving to Virginia and called it a death benefit?
No. Although the taxpayer borrowed from the annuity before moving to Virginia, he did not recognize the cash-surrender value, including the unpaid loan, until he surrendered the contract in 2008 while…
What major Virginia state and local tax legislation did the Department of Taxation identify in its 2012 Legislative Summary?
This historical Department guide summarized state and local tax legislation enacted through the May 14, 2012 reconvened session. Major state changes included mandatory electronic corporate and sales-t…
Was a printing company's leased electrostatic duplicator exempt when it produced fewer than 4,000 impressions per hour?
No. Virginia's printing exemption applied only to electrostatic or other duplicators capable of at least 4,000 impressions per hour and used by a business primarily printing or photocopying products f…
Under Virginia's superseded 2012 motor-vehicle rental guidelines, which short-term rentals were taxed, what entered gross proceeds, and where was tax sourced?
Under these superseded guidelines, most passenger-vehicle rentals under 12 months bore a combined 10% charge: a 4% tax, a 4% additional tax, and a 2% fee. Vehicle type and weight could produce differe…
Which of two individuals was personally liable for a corporation's unpaid consumer-use-tax assessment during its shutdown?
The acting president was liable; the minority shareholder was not. The president remained a director and company president through the shutdown, knew of the audit liability, controlled requests for av…
Could a Virginia resident claim a Virginia credit for West Virginia and Maryland tax withheld from wages covered by reciprocity?
No. Virginia's reciprocal agreements with West Virginia and Maryland exempted this Virginia resident's wages from those states' income taxes. Because he was not legally subject to their tax, he could …
Could Maryland residents recover Virginia tax withheld from Virginia wages when amended returns followed a later Maryland audit?
Yes. Under Virginia's reciprocal agreement with Maryland, the Maryland-resident spouses were not subject to Virginia income tax on their Virginia wages. Although the ordinary refund period had passed,…
Could a person who moved out of Virginia avoid adjustments to the standard deduction and personal exemption on a 2010 part-year return?
No. A part-year resident was taxable for the portion of the year spent as a Virginia resident. The standard deduction was prorated by the share of federal adjusted gross income attributable to Virgini…
Could doughnut shops keep the difference after mistakenly collecting 5% sales tax from customers but remitting only the 2.5% reduced food rate?
No. Eligible food could have been taxed at 2.5%, but the shops actually charged customers 5%. Virginia required dealers to remit every dollar collected, including erroneous or illegal overcollections,…
Did living abroad, holding a foreign license, and paying foreign tax prove that a taxpayer abandoned Virginia domicile for 2008?
No. The taxpayer showed a residence, driver's license, vehicle, and tax return in another country, but did not provide requested voting records or a usable federal transcript. She also maintained a pe…
Was a tire-shop foreman personally liable for corporate taxes merely because he held the title of president and could sign checks?
No. The taxpayer's president title was nominal; he continued working as shop foreman while another officer exclusively handled accounting, returns, bills, and taxes. He used check authority only rarel…
Was an installed landfill truck scale a resale, or was the seller a consuming contractor liable for tax on its costs?
The scale was a real-property installation, not an exempt resale. The resale certificate arrived three years after the transaction, described a waste-service customer rather than a scale dealer, and c…
Was a Virginia sales-tax appeal timely when the taxpayer faxed it two days after the 90-day deadline?
No. The February 1, 2012 assessment required a complete appeal by May 1. For a fax filing, the appeal had to be dated and received by the 90th calendar day. The taxpayer transmitted and Virginia recei…
Could mobile pollution-control equipment qualify for Virginia's sales-tax exemption without being permanently attached, and who had to certify it?
Mobile tangible property could qualify even when used at multiple sites and not permanently attached. But the exemption did not apply until DEQ or the authorized pollution-control board certified that…
What documentation allowed a medical-device seller to treat prosthetic-device sales to Virginia hospitals and physicians as exempt?
For profit hospitals and physicians, the device had to be bought for a specifically identified patient, and the seller needed a signed purchaser statement tying the qualifying device to that patient's…
Could a Virginia-resident spouse claim a proportional share of joint federal itemized deductions when the other spouse lived in another state?
Yes. When a Virginia resident and nonresident spouse filed separate state returns but a joint federal return, separately traceable deductions belonged to the appropriate spouse. Joint deductions that …
Could a taxpayer shift a 2007 Virginia assessment to the preparer who completed the return, and could later deduction records still reduce it?
The assessment could not be transferred to the preparer. Virginia's self-assessment system made the taxpayer responsible for return accuracy, with any claim against a negligent preparer pursued separa…
Which dealers owed Virginia's historical June 2012 accelerated sales-tax payment, how was it calculated, and when could hardship relief apply?
For June 2012, a dealer or direct-payment permit holder with at least $26 million in taxable sales and purchases during the prior July-June fiscal year had to prepay 90% of its June 2011 sales-and-use…
Did a corporation need Virginia permission to switch from a consolidated return after all affiliates became disregarded single-member LLCs?
No permission was needed because separate filing was mandatory. After the four corporate affiliates became wholly owned single-member LLCs treated as disregarded entities and transferred their operati…
Could a long-term truck lessor buy later repair parts for resale, and was federal tire excise tax included in Virginia consumer use tax?
No resale exemption applied. The lessor installed parts during one-year truck leases but showed no Virginia motor-vehicle or retail tax charged on lease receipts or the repairs, and the parts were not…
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 wholesaler buy heat-treated export pallets for resale when it used them once to deliver federal commissary supplies to the port?
Yes. The wholesaler separately itemized the pallets, bought them only to fill export orders, applied customer-required heat treatment, and transferred title when the federal agency accepted the loaded…
Did new evidence about an out-of-state home and Virginia mailing arrangements prove that a taxpayer abandoned Virginia domicile for 2007?
No. On reconsideration, Virginia again found that the taxpayer had not abandoned her Virginia domicile. She kept and renewed a Virginia driver's license, registered vehicles in Virginia, was construct…
What Virginia tax interest rates applied during the third quarter of 2012?
Virginia's third-quarter 2012 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after the statutory nine-m…
Did a timely extension payment preserve a 2006 Virginia refund when the taxpayer did not prove the return was filed within the extension period?
No. Paying with an extension was only one condition; the taxpayer also had to file the return by the extended November 1, 2007 deadline. Virginia had no record or objective proof of the claimed Octobe…
Could taxpayers subtract both a taxable annuity death benefit and a distribution from an inherited IRA on their 2008 Virginia return?
Only the annuity death benefit qualified. It was a federally taxable lump-sum payment to the beneficiary under an annuity contract, satisfying Virginia's subtraction. The inherited IRA distribution wa…
Did Virginia sales tax apply to an association's fee for reserving a pavilion or lodge when no property or other services came with it?
No. The property owners association charged members and leaseholders in good standing to reserve a beach pavilion or lodge for meetings, parties, and community events. Because the reservation applicat…
Which marketing-firm audit items did Virginia remove, and could creative pass-through costs or appeal interest also be abated?
Virginia granted only documented adjustments. It removed specified items mailed or shipped to the Washington, D.C. customer and reduced the contested sales measure by the documented 35% non-Virginia m…
Were a telephone company's fixed-price equipment transactions exempt repairs, and did its spreadsheet prove credits for Internet-service equipment?
Not with the evidence presented. The supplier invoices looked like fixed-price product transfers, and the contract permitted advanced replacements and other exchanges, so the company did not prove tha…
Did a telephone company prove that supplier charges were exempt repairs or that taxed equipment qualified for Virginia's Internet-service exemption?
Not with the submitted records. The invoices charged for products and the contract allowed advanced or replacement equipment, so the company did not prove that each charge covered only a separately st…
What happened when a taxpayer did not report an IRS income adjustment but later said she was only a part-year Virginia resident?
Virginia was authorized to assess the IRS adjustment because the taxpayer did not file the required amended Virginia return. But her original return had treated her as a full-year resident, while she …
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 …
Could beneficiaries subtract federally taxable annuity death-benefit payments from Virginia income when the benefits were not paid in a lump sum?
No. Virginia required an annuity death-benefit payment to come from an annuity contract, be awarded to the beneficiary in a lump sum, and be federally taxable. The wife's survivor annuity payments fai…
Did an out-of-state employer owe Virginia withholding for employees working in Virginia when it lacked detailed payroll records?
Yes. A nonresident employer can owe Virginia withholding when employees earn wages from services performed in Virginia. Because the corporation kept no detailed employee records, Virginia reasonably e…
Could a flooring seller keep tax collected on lump-sum invoices by later treating labor as separate, and could Virginia estimate sales when invoices were missing?
No. The seller collected sales tax on the full lump-sum customer charges, then revised the invoices internally to separate labor and remitted less tax without refunding customers. Virginia required it…
Which natural-gas well items qualified for Virginia's pollution-control or direct-use exemptions in this superseded ruling?
Historically, Virginia removed DMME-certified pit liners, fluid-collection tanks, and silt fence purchased before the pollution-control exemption expired on July 1, 2006. It kept tracer wire and stone…
Could taxpayers contest unpaid tax from their 2005 return by saying an IRS dispute was pending without filing a complete Virginia appeal?
No. The taxpayers' letter did not identify an assessment error, relevant facts, grounds, or controlling legal authority, despite repeated requests for information. Virginia denied the incomplete appea…
Could a graphic printer overturn tax using incomplete or post-audit exemption certificates and unsupported resale or manufacturing claims?
No. Virginia held that incomplete, invalid, facially inconsistent, or inapplicable certificates did not protect the printer, especially when obtained after the audit rather than relied on at the time …
Were separately stated, optional sign-permit and site-survey charges excluded from Virginia sales price as services, pass-through fees, or installation?
No. Manufactured signs were taxable tangible personal property, and the permit and site-survey charges completed or supported those sales. Virginia found no statute excluding the charges merely becaus…
Was an electrical contractor's purchase of a generator from its owner an exempt occasional sale, and could audit interest be waived?
Virginia removed the generator from the audit because the facts supported the occasional-sale exemption for its transfer from the contractor's owner. Virginia did not reduce interest: interest was man…
Which printer sales were supported by exemption certificates, and was separately stated postage taxable?
Virginia decided each exemption certificate by whether a reasonable dealer could conclude that the particular goods were covered. It removed direct-mail statements, flash drives and lanyards, and pens…
Were golf green fees inside a single-price accommodation package taxable, and were the audit penalties waived?
The green-fee portion was taxable because a single-price accommodation package is taxed in full. For this audit, however, Virginia abated the green-fee tax and interest because the taxpayer's detailed…
Was a multistate commercial printer a manufacturer for Virginia local BPOL and business-property taxes?
Yes. Virginia considered the printer's facilities as one business rather than isolating the county's direct-mail location. Its printing transformed raw materials and its manufacturing operations were …
Were amusement-equipment rentals exempt services when a trained operator stayed with the equipment?
No. Virginia found that the customers' true object was renting the amusement equipment. Although trained operators remained on site, their work mainly ensured proper setup, tethering, and participant …
Did a campground owe tax on park trailers used as cabins, and did it have to tax campground accommodations?
Yes. Virginia classified the wheeled, detachable-hitch park trailers as tangible personal property rather than modular buildings. The campground was the consumer of trailers used to provide accommodat…
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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.