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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Were a manufacturer's wholesale sales of affiliate-made chemicals a separate BPOL-taxable business, and could out-of-state receipts be deducted?
Yes. Sales of chemicals made by affiliates outside the city were a significant wholesale activity, not merely ancillary to manufacturing at the city plant, so a wholesale BPOL license was required. Re…
Could taxpayers challenge Virginia assessments more than 90 days after they were issued while seeking IRS reconsideration?
No. The taxpayers filed their administrative appeal well after Virginia's 90-day deadline, so the Commissioner found no basis for relief. Virginia could assess from the IRS's final figures after the t…
Were electronically delivered digital certificates subject to Virginia retail sales and use tax?
No. The provider's customers registered online, received and installed the digital certificates electronically, and received no tangible personal property. Virginia treated the lump-sum certificate, a…
Which land-clearing and mulch-production equipment qualified for Virginia industrial-processing or forest-harvesting exemptions?
Mobile grinders, loaders, trucks, and related parts used at temporary clearing sites did not qualify for industrial processing, and grinding or chipping was not exempt forest harvesting. Equipment at …
Could Virginia consider a consumer-use-tax appeal mailed after the 90-day assessment deadline?
No. The March 10, 2011 assessment had to be appealed by June 8, but the legible appeal was mailed July 13. Virginia strictly enforced the 90-day limit and barred consideration despite written notices …
Did intercompany job-cost entries create taxable equipment leases when no cash or written rental agreement changed hands?
Yes. The owner's transfer of equipment possession to sister companies, combined with due-to, due-from, and job-cost entries, supplied consideration for taxable leases even without cash payments or wri…
Could a flooring distributor remove sampled sales using late resale certificates or customers' direct use-tax payments?
Only in part. Virginia removed sales supported by valid certificates or verified customer records, but kept sales backed by incomplete or unverified certificates. Customers' direct use-tax payments di…
Who owed Virginia communications tax when a provider billed lodging facilities in January 2007 for December 2006 services?
The January 2007 bills were subject to the new 5% communications sales and use tax even though the services were provided in December 2006. Under Virginia's transition guidance, the bill date controll…
Who owed Virginia communications tax when a provider billed lodging facilities in January 2007 for December 2006 services?
The January 2007 bills were subject to the new 5% communications sales and use tax even though the services were provided in December 2006. Under Virginia's transition guidance, the bill date controll…
What Virginia tax interest rates applied during the first quarter of 2012?
Virginia's first-quarter 2012 rates were 5% for tax underpayments and 5% for overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after nine months until the De…
Could severe medical problems extend Virginia's deadline to claim a 2004 income-tax overpayment as a 2005 credit?
No. Applying an overpayment to the next year was subject to the same three-year limit as a refund. The taxpayer's missed extended filing date made the extension invalid, and the September 2008 return …
Was an unused railroad line still operating property for Virginia local property tax before formal abandonment?
Yes. Although the line was unused and parts were paved over, the railroad retained an easement allowing freight service and did not permanently withdraw the property until its September 2010 abandonme…
Where were an interstate motor carrier's tractors and trailers subject to Virginia local tangible-property tax?
The city could not assess additional 2007 tax because its assessment period had expired. For 2008-2010, however, situs depended on where tractors and trailers were normally garaged or parked, consider…
Could subsidiaries with no positive Virginia apportionment factor join a consolidated return, and could the parent use a liquidated subsidiary's NOL?
The subsidiaries could not join the 2006-2007 Virginia consolidated returns because neither had a positive Virginia apportionment factor or Virginia-source income. Incorporation, Virginia-based direct…
Could the Virginia Tax Commissioner decide whether a county should value a used recreational vehicle at purchase price or NADA value?
No. Although the Department can hear certain local-tax appeals, Virginia law expressly bars the Tax Commissioner from determining the value of property subject to local mobile property tax. The Depart…
Did joint-bank records prove that a Virginia resident separately paid all itemized deductions from a nonresident spouse?
Not yet. The resident's payroll entered the joint account used for mortgage and real-estate-tax payments, but nine unexplained transfers also entered that account. Without proof that the transferred f…
Could Virginia include a nonresident servicemember spouse's federally excluded combat pay when allocating joint itemized deductions?
No. Virginia could proportionally allocate joint deductions and exemptions between the resident taxpayer and nonresident spouse when the items were not separately accounted for. But the ratio had to u…
How did Virginia tax pond fountains, aeration equipment, weed-control services, fish, plants, and installation?
Fountain and aeration treatment depended on whether installation made the equipment part of the realty: a contractor paid tax on permanent fixtures, while equipment remaining tangible was a taxable re…
Did refinancing through a lender's subsidiary qualify for Virginia's same-lender recordation-tax exemption when the parent serviced the loan?
No. The original lender's subsidiary made the refinanced loan, while the parent merely serviced it and received the monthly payments. Because the parent and subsidiary were separate legal entities, th…
Could a Virginia resident claim all dependent exemptions but only a proportional share of joint itemized deductions with a nonresident spouse?
Yes. Claiming all dependent exemptions on the resident's separate state return showed the spouses' mutual agreement and separate accounting, so those exemptions were allowed. But the resident did not …
Who decides a property's actual value when Virginia deed recordation tax differs from the stated consideration?
The circuit-court clerk. Virginia recordation tax used the greater of consideration or actual property value, and assessed value carried a strong presumption but was not conclusive. The Department ask…
Could Virginia include a nonresident servicemember spouse's federally excluded combat pay when allocating joint deductions and exemptions?
No. Virginia could proportionally allocate joint deductions and exemptions when the resident and nonresident spouses did not separately account for them, but the calculation had to use federal adjuste…
Could Virginia include a nonresident servicemember spouse's federally excluded combat pay when allocating joint itemized deductions?
No. Virginia could proportionally allocate deductions when the resident and nonresident spouses did not separately account for them, but the calculation had to use federal adjusted gross income. Comba…
Did a military logistics contractor have a definite place of business at the city supply center for BPOL tax?
Yes, on the stated facts. Hundreds of employees and an on-site supervisor continuously worked in designated, segregated military space on tasks lasting at least 30 days; the contractor also used a loc…
Did Virginia's reduced food-tax rate apply to hospital meal-management fees or raw ingredients?
The general rate applied to management fees connected with prepared hot patient meals, because for-profit healthcare facilities consumed those meals as part of patient care. Raw food ingredients could…
Were furnished corporate apartments a county definite place of business with rental receipts sitused there for BPOL tax?
Yes. The provider leased apartments from owners and sublet them directly to client occupants under its own agreements. Furnishings, utilities, housekeeping, and other amenities did not change the esse…
Was real property contributed by a corporation for a 42% LLC interest exempt from Virginia recordation tax?
No. Both combining corporations survived, the new entity was an LLC rather than the corporation required for the cited federal reorganizations, the transfer was corporation-to-LLC rather than parent-t…
Were Internet-delivered call-tracking services exempt from Virginia sales tax or taxable as communications services?
Both rules applied differently. Call tracking delivered caller information through the Internet with no tangible property and was exempt from retail sales and use tax. But routing toll-free calls met …
Could a restaurant avoid Virginia tax, interest, or penalty because the employee handling sales-tax compliance was hospitalized?
No. The restaurant had collected sales tax from customers, held it in trust for Virginia, and failed to file returns or remit the money. The responsible employee's lengthy hospital stay did not change…
Was an out-of-state national bank with only a Virginia mortgage-loan office subject to bank franchise tax and exempt from BPOL tax?
Yes. After a circuit-court decision, Virginia reversed its earlier policy and treated the national bank's mortgage office as sufficient for bank franchise tax even without Virginia deposits. The bank …
Could a federal consolidated-group member claim its allocated IRC § 199 deduction on a separate Virginia return?
Yes. The expanded affiliated group computed one IRC § 199 deduction and allocated it among members in proportion to qualified production activities income. That member-level share was the same whether…
Could a Virginia resident claim all dependent exemptions and itemized deductions from a joint federal return with a nonresident spouse?
The resident could claim all dependent exemptions because the nonresident spouse did not claim them on the other state return, showing separate accounting and mutual agreement. The resident had not do…
Could tenant or contractor jobs count toward Virginia's historical data-center exemption, and who could claim it?
Yes, if the VEDP memorandum allowed it and the jobs were located at and associated with operating or maintaining the data center. But only the single entity that owned the qualifying center, met the i…
Could an employed taxpayer subtract disability payments from Virginia income because the injury arose during combat-zone training?
No Virginia subtraction was allowed on the returns as filed. The state subtraction required qualifying disability income for a period when the individual was absent from work because of permanent and …
Could a taxpayer overturn a Virginia income-tax assessment with an appeal that identified no error, relevant facts, or supporting authority?
No. A Virginia assessment was presumed correct, and the taxpayer bore the burden of showing error. His letter did not identify an alleged error, give relevant facts, state grounds for relief, cite con…
Were out-of-state domiciliaries who stayed in their Virginia home more than 183 days for medical reasons Virginia residents?
Yes, for the part of each year they lived in Virginia. Their medical reason and lack of intent to restore Virginia domicile did not prevent actual residency after they maintained a Virginia abode and …
Should a vehicle marketer charge Virginia sales tax on a direct-mail program's list price or the 50% discounted price actually billed?
Tax applied to the discounted price actually charged to the dealerships because the marketer absorbed the 50% discount and received no third-party reimbursement. The marketer could recover tax previou…
Did Virginia exempt an egg processor's tray washer, wastewater wagon, or chicken-house pit fans from sales and use tax?
Only the pit fans were exempt. The plastic tray washer performed general maintenance rather than direct egg processing, and the honey wagon disposed of wastewater after production rather than acting i…
Could a corporation avoid Virginia's related-party factoring-fee addback by asserting a valid securitization business purpose during its audit appeal?
Not through the procedure it used. The corporation had to report the addback, pay the tax, penalty, and interest, and then petition with clear and convincing business-purpose evidence. Because it clai…
Must Virginia deed-recordation tax use the property's assessed value when it exceeds the stated consideration?
Not automatically. Recordation tax used the greater of consideration or actual property value, and assessed value carried a strong presumption of accuracy. But the circuit-court clerk could consider c…
Could Virginia Taxation exempt or refund tax on pollution-control equipment before a statutory certifying authority approved it?
No. The Department of Taxation administered the exemption only after a statutory certifying authority approved the equipment; it had no power to make that technical certification itself or override DE…
Did an out-of-state return and voter registration overcome evidence from a Virginia driver's license and vehicle registrations?
No. The out-of-state resident return and voter card supported domicile elsewhere, but the taxpayer obtained a Virginia driver's license in March 2007, renewed it in 2010, and kept two vehicles and a t…
When spouses file separate Virginia returns and one is a nonresident, what income measure allocates shared deductions and exemptions?
Federal adjusted gross income was the example Virginia used for proportional allocation. Each spouse first had to account separately for income, deductions, and exemptions. Only items that could not b…
Could a taxpayer relitigate business deductions in Virginia after the IRS made a final 2005 itemized-deduction adjustment?
No. Virginia generally follows federal figures and does not look behind the IRS's final determination after a federal examination. The taxpayer had one year to report the federal change on an amended …
Was a machine dispensing exempt gloves, ear plugs, and safety glasses itself exempt manufacturing equipment?
No. The machine controlled and dispensed safety supplies but was neither indispensable to nor an immediate part of production. Exempt safety apparel did not make the storage-and-dispensing machine exe…
Could a county impose BPOL tax on a foreign parent because its wholly owned service subsidiary operated in the county?
No. The subsidiary was a separate legal business operating at the county location, while the foreign parent had no facility, employees, property, or business activity there. Virginia ordered the count…
Did a public school division's annual or every-other-year surplus auction qualify as an occasional sale?
Only if all of the school division's sales stayed within the occasional-sale limit. Government surplus sales were generally taxable. A seller making three or fewer separate sales occasions in a calend…
Was a worker living in Virginia over 183 days a resident, and could she deduct Virginia housing as temporary-job lodging?
Virginia treated her as an actual resident because she maintained a Virginia abode for more than 183 days, even if her domicile remained elsewhere. Housing was not deductible as temporary-job lodging …
Was an individual personally liable for a dissolved company's tax merely because her Social Security number appeared on company returns?
No. The available evidence showed that her Social Security number had been used erroneously on company returns and that she had never been a shareholder, officer, director, or employee. She therefore …
Was a former president personally liable for company use tax when tax and finance duties belonged to the CFO?
No. His responsibilities were limited to operations and sales, while the CFO handled tax filings, financial reporting, and bank accounts. The president left active involvement before the company recei…
Could an out-of-state receivables affiliate join a Virginia combined return or avoid factoring addbacks through a business-purpose claim made on appeal?
No. The receivables affiliate operated entirely outside Virginia, lacked Virginia nexus, and would not have been subject to Virginia income tax on a separate return, so it could not join the combined …
Did year-round employees supporting a customer at its county facility create a BPOL definite place of business?
Likely yes. The provider owned no local property and had no phone, advertising, mail, or administration at the client site, but its employees performed around-the-clock services there 365 days a year.…
Did homeowners qualify for Virginia's same-lender refinance tax rule when the broker had sold the original mortgage to its parent bank?
No. The reduced recordation-tax rule applied only when the refinancing lender was the lender then holding the existing deed-of-trust debt. Although both loans went through the same broker, the broker …
Did a Virginia-domiciled travel nurse owe Virginia tax on wages earned in other states?
Yes. She admitted that she had not changed her Virginia residency, so Virginia taxed her as a resident on federal adjusted gross income even though she lived and worked elsewhere. She qualified for Vi…
Did a military spouse qualify for a Virginia withholding refund when she and the service member did not share the same domicile?
No. The spouse appeared to retain domicile in State A, but the service member had never been physically present there and therefore could not acquire State A domicile despite vehicle registration, vot…
What Virginia tax interest rates applied during the fourth quarter of 2011?
Virginia's fourth-quarter 2011 rates were 5% for tax underpayments and 5% for overpayments, reflecting 3% corresponding federal rates plus two percentage points. For estimated-tax additions, June 30 y…
What Virginia filing and payment relief applied to Hurricane Irene victims with September 15, 2011 deadlines?
Virginia gave qualifying individuals and businesses seven extra days, through September 22, 2011, for income- and withholding-tax returns and payments otherwise due September 15. Relief applied when n…
Could a pass-through recipient preserve transferred conservation credits based on an easement appraisal Virginia found overstated?
No. Virginia rejected the landowner's unsupported approximately $31 million easement valuation and adopted an independent $3.9 million sales-comparison value. That reduced the total credit from about …
Did Virginia accept a conservation-easement appraisal valuing the donated interest at about $31 million?
No. The owner's discounted-cash-flow appraisal used unsupported lot assumptions and implied nearly eightfold land appreciation in about 2½ years. Virginia adopted an independent sales-comparison appra…
Could taxpayers move a 2008 Virginia NOL deduction to 2007 because an other-state tax credit prevented a cash refund for 2006?
No. Virginia required the 2008 loss to follow the ordinary two-year federal carryback sequence after disallowing the special five-year carryback. The deduction fully reduced the taxpayers' 2006 FAGI a…
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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.