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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Did a military spouse prove she shared the service member's out-of-state domicile and qualified for Virginia withholding refunds?
Not on the record submitted. The spouse bought a Virginia home, obtained a Virginia driver's license, registered vehicles in Virginia, used a Virginia address on federal returns, and produced no evide…
Could a taxpayer challenge a 2000 Virginia assessment in 2012 by demanding that the Department first prove it was correct?
No. The assessment was issued June 6, 2003, but the taxpayer did not appeal until November 2012, long after Virginia's 90-day deadline. Department records also showed earlier notices to the same addre…
When would Virginia remove disputed hardware-store transactions from an audit sample or accept a claimed nonprofit exemption?
Virginia removed a documented 44-day customer account from the sample and taxed those sales separately, while sending an unusually large truss sale for review under a larger sample. Unsupported nonpro…
Did a merchant mariner abandon Virginia domicile by taking an indefinite out-of-state job and using motels or a training center between voyages?
No. Although the mariner had indefinite employment and a post-office box in another state, he never established a permanent abode there and retained major Virginia ties: his wife, voter registration, …
Could a Virginia resident avoid a 2010 income-tax assessment by claiming wages were exempt and IRS information lacked federal paperwork approval?
No. Employment income was taxable, the resident's income exceeded Virginia's filing threshold, and the Department could use IRS information to estimate liability when she did not provide adequate reco…
Did leasing homes outside Virginia establish a new domicile when the taxpayer retained Virginia property, licensing, and registration ties?
No. Even if the taxpayer began abandoning Virginia in 2009, she did not establish a new permanent or indefinite domicile in either state where she temporarily leased housing during 2010. She retained …
Could an advertising business reduce a consumer-use-tax assessment without records supporting its tax-paid, resale, and sampling objections?
No. Virginia assessments are presumed correct, and the taxpayer bears the burden of proving an error. The advertising business received extra time but supplied no records supporting its claims that pu…
Did moving to a foreign country establish a new domicile when the taxpayer retained an available Virginia home, voter registration, and driver's license?
No. Although the taxpayer and her husband established a home and employment in another country, their Virginia residence remained available, and she obtained Virginia voter registration and renewed a …
Did returning to a foreign home and job end Virginia domicile when the taxpayer kept a Virginia home, license, vehicles, voting ties, and family connections?
No. Although the taxpayer returned to a permanent home and full-time work in Country A, he kept his Virginia residence, renewed his Virginia driver's license, maintained vehicle and voting ties, and l…
Were a graphic-design firm's brochures, signs, booklets, and exhibit panels exempt professional advertising services rather than taxable property sales?
Mostly no. Virginia kept brochures, signs, booklets, spec sheets, and other jobs in the audit because the available invoices and work statements did not prove professional media-advertising services. …
What happens when neither a business nor the city provides a clear record supporting a local property-tax assessment, and who controls an offer in compromise?
Virginia remanded the 2010 assessment because neither the taxpayer nor the city supplied a clear factual and documentary record, and the assessment was more than 600% above the adjusted 2011 amount. T…
Which reconstruction-contractor purchases could be removed from a Virginia use-tax audit when invoices were missing, mismatched, or showed duplicates?
Virginia removed transactions supported by adequate records and entries shown to be duplicates. It kept purchases where invoices were missing, did not match the audited item, showed no sales tax, or i…
Did dismissal of criminal tax charges require Virginia to erase the related income-tax assessment and refund garnished amounts?
No. Dismissal of the criminal charges did not by itself invalidate the civil income-tax assessment. Because the taxpayer supplied no documentation showing how the mortgage-fraud-related bank deposits …
Did a subcontract stating that the subcontractor would pay tax prove Virginia tax was paid on a contractor's purchases?
No. A quote and subcontract assigning tax responsibility did not prove the tax was actually paid. The contractor could not reconcile tax amounts to the purchases and supplied no original invoices. Bec…
Could a convenience store overturn a sales-tax assessment by disputing the audit sample without producing supporting records?
No. The auditor compared returns, cash-register receipts, and sales spreadsheets over a three-month sample and found the store's spreadsheets did not reconcile to gross sales reported on its returns. …
Could Virginia estimate a grocery store's taxable nonfood sales when the store had no records for most of the audit period?
Yes. With no records for 2009-2011, Virginia could use the best information available. Auditors reasonably projected nonfood sales from two agreed observation days, a 6% barcode-error test, and untaxe…
Could an individual challenge Virginia's 2008-2009 estimated income-tax assessments after the 90-day appeal deadlines?
No. The taxpayer appealed the 2008 assessment more than a year after its April 4, 2012 deadline and appealed the 2009 assessment after its November 27, 2012 deadline, so both applications were barred.…
Could a Virginia resident avoid 2008-2009 income tax by claiming income earned outside a federal enclave was not taxable?
No. A Virginia resident's federal adjusted gross income was the starting point for Virginia taxable income, subject to statutory modifications, and a state may tax its residents' income even when earn…
Did a hotel prove that Virginia's Invoice Capture Tool used the wrong sample population, gross-up, or exception total in its audit?
No. The auditor removed offsetting positive and negative transactions over $20,000 and, under Department policy, excluded the remaining negative transactions from the Invoice Capture Tool population. …
Did a service member's statement that the military treated another state as home prove her 2009 military pay was exempt from Virginia tax?
Not by itself. The Servicemembers Civil Relief Act protected an existing domicile from changing solely because of military orders, but the taxpayer had filed a Virginia resident return, reported civil…
Could a taxpayer undo her 2009 Virginia resident return without clearly documenting where she lived and established domicile?
Not on the evidence submitted. The taxpayer had some ties to another state but retained a Virginia driver's license until October 2009, filed a full-year Virginia resident return, and had Virginia tax…
Did an other-state return and surrender of a Virginia license prove that a taxpayer changed domicile before 2009?
Not by themselves. The taxpayer filed a 2009 return in another state and had surrendered her Virginia driver's license in August 2008, but she did not provide the additional records Virginia requested…
Could a shuttle company treat its drivers as independent contractors without contracts, tax forms, or payment records?
No. The shuttle service supplied no contracts, Forms W-2 or 1099, employment forms, individual driver records, or payment documentation supporting independent-contractor status. Virginia therefore tre…
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…
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 a 2005 Virginia assessment be overturned by arguing that IRS information was obtained unlawfully, without evidence of nonresidency?
No. Virginia held that IRC § 6103(d) authorized the Department to obtain IRS information for a resident nonfiler and that state law allowed an estimated assessment. Because the taxpayer offered no obj…
Did a retailer's spreadsheets prove that sampled untaxed deductions were gift-certificate sales rather than taxable sales?
No. The retailer's spreadsheets lacked detailed deduction descriptions and did not reconcile to the sample month's reported gross sales or total deductions. A later spreadsheet also showed gift-certif…
Could taxpayers defeat a Virginia resident assessment by demanding proof after ignoring requests prompted by a federal return using a Virginia address?
No. Virginia lawfully used federal information showing a Virginia address, requested records to determine liability, and assessed from the information available when the taxpayers did not respond. Bec…
Did a taxicab business qualify for reconsideration by claiming that Virginia's final BTPP valuation determination misstated its facts and law?
No. Virginia had upheld the city's use of a recognized pricing guide with physical-condition adjustments. On reconsideration, the Department found that any factual misstatements resulted from the taxp…
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…
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 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…
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 …
Could a city use a vehicle pricing guide to value taxicabs for local business-property tax?
Yes, if the method is uniform within the taxicab class and reasonably estimates fair market value. Virginia found the city's guide-based method facially acceptable and said using a different method fr…
Was a Virginia nonfiler's assessment unsupported when the Department relied on wage, dividend, and interest data from the IRS?
No. IRS information showed 2008 wage, dividend, and interest income and gave Virginia a factual basis to estimate tax when the taxpayer filed no return or response. The assessment was presumed correct…
Could Virginia estimate a floor-covering dealer's sales tax from a prior audit when current records were inadequate?
Yes. The dealer supplied unsigned federal returns and monthly income statements but did not reconcile them to reported taxable sales or provide other valid data. Virginia therefore allowed the auditor…
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…
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…
Could a taxpayer overturn years of Virginia assessments by claiming he had no federal adjusted gross income under his reading of federal law?
No. Appeals for 1995, 1996, 1998-2001, and 2005 were filed after Virginia's 90-day deadline and were barred. The 2007 appeal was timely, but the taxpayer admitted receiving income and supplied no obje…
Did the taxpayer prove that three software purchases were electronically delivered without any taxable tangible medium?
Only in part. Two Vendor 1 items remained taxable because the records did not prove electronic delivery was the sole method: one transaction referenced a CD and ground shipment, and the other lacked a…
Could a taxpayer deduct mortgage interest when the deed, mortgage records, and Form 1098 did not clearly distinguish him from his identically named father?
Not on the evidence submitted. Because the taxpayer and his father had the same name, the deed and payment records did not establish which man owned the home or owed the mortgages, while Form 1098 use…
Could a Virginia taxpayer reverse an audit assessment for itemized deductions without providing the requested supporting records?
No, not without substantiation. Virginia upheld the 2007 and 2008 assessments because the taxpayer did not provide records supporting the itemized deductions and an assessment is presumed correct unti…
Could a nursing assistant keep unreimbursed vehicle-expense deductions without records substantiating the business use?
No. Virginia upheld the 2007 and 2008 assessments because the taxpayer did not provide the requested records substantiating business use of her personal vehicle. The assessment was presumed correct, a…
Will Virginia cancel a resident income-tax assessment when the taxpayer does not provide the requested domicile evidence?
Not without evidence. Because the taxpayer did not provide the domicile information requested during the audit or appeal, Virginia found no basis to adjust the 2007 assessment. The Commissioner allowe…
Could a Virginia watercraft business defeat retail and watercraft tax assessments by asserting that it made no sales during the audit period?
No. Virginia upheld the assessments because sales and rental agreements, registration records, and commingled transactions showed that the business made taxable sales and rentals during the audit peri…
Did notices of intent and information requests preserve appeals of Virginia nonfiler assessments without complete appeals filed within 90 days?
No. Virginia had not received complete appeals stating the taxpayer's grounds and relevant facts within 90 days of either assessment, so both appeals were barred. The taxpayer also provided no objecti…
Could a taxpayer reverse a paid Virginia assessment without providing records substantiating the itemized deductions claimed?
Not yet. Virginia upheld the assessment because the taxpayer supplied no records supporting the itemized deductions despite repeated requests, and the assessment was presumed correct. The Department a…
Could a Virginia seller remove assessed sales by providing exemption certificates during its appeal after the audit?
Yes for the six contested lines addressed. Although certificates obtained during or after an audit were accepted only when valid for the specific transactions, the seller's appeal certificates were co…
Was a taxpayer an actual Virginia resident in 2005, making her State A retirement income taxable, when evidence indicated more than 183 Virginia days?
Yes on the existing record. Virginia concluded that the taxpayer maintained a Virginia abode for more than 183 days in 2005, making her an actual resident even if State A domicile continued. Her feder…
Did attending college and living in student housing outside Virginia prove that a taxpayer changed domicile for 2006?
No, not on the evidence provided. Virginia generally did not treat a dorm or college apartment, or temporary student employment, as proof of a permanent new domicile. The taxpayer asserted ties to ano…
Did Virginia use tax apply to equipment rentals when a Tennessee vendor charged tax but the contractor took possession in Virginia?
Yes. Each rental agreement was taxed where the contractor took possession when that agreement was made. Seven agreements identified Virginia pickup locations, so Virginia tax applied despite Tennessee…
Was a taxpayer domiciled in Virginia for 2005 because he had obtained a Virginia driver's license and registered to vote?
No. The taxpayer had lived abroad since 2003, his child lived and attended school there, he owned no Virginia property, and he reported self-employment income as foreign earned income using the foreig…
Did invoice language saying tax was included relieve a flooring contractor from use tax when the vendor did not separately state or remit Virginia tax?
No. The invoices said tax was included but did not separately state a Virginia sales-tax charge, the seller was not registered to collect Virginia tax, and no evidence showed remittance. The contracto…
Was a corporation's president and sole owner personally liable as a responsible officer for unpaid Virginia corporate income tax?
Yes. Virginia found that the president and sole owner had authority over tax filings and payments, knew the 2006 tax was due, and did not prove that funds or control were unavailable. Her history of s…
Could a physician-owned medical corporation exempt bulk controlled-drug purchases when its invoices named only the corporation?
Not without more proof. Virginia's exemption could cover controlled drugs purchased for licensed physicians' professional use, including through qualifying physician-owned corporations. But these invo…
Did a panel seller provide enough evidence to remove set-up fees and sales allegedly picked up outside Virginia from its audit?
Only in part. Virginia removed documented set-up fees because they were construction services rather than retail panel sales. But it kept the sales-without-installation items because the invoices show…
Did a taxpayer's statement that he lived and worked outside Virginia in 2003 justify removing the state's income-tax assessment?
Not yet. The taxpayer said he lived and worked outside Virginia in 2003, but he retained a Virginia driver's license, voter registration, vehicle registration, and a Virginia address receiving federal…
Did a taxpayer prove she lived outside Virginia in 2004 after ignoring three Department requests for residency evidence?
Not yet. Virginia had third-party tax documents sent to a Virginia address and a Virginia license later renewed in 2007. The taxpayer claimed another-state domicile but did not provide all evidence re…
Did a retiree change his domicile from Virginia by maintaining a home, voter registration, and resident returns in another state?
No. The taxpayer had established Virginia domicile while working at a university and did not prove that he abandoned it after retirement. His other-state home, voter registration, and resident returns…
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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.