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 an occupational healthcare provider have to charge Virginia sales tax on its medical services, and how were its supplies treated?
The provider did not have to charge sales tax on the described professional medical services. But as a practitioner and service provider, it was the consumer of tangible personal property used to perf…
Under Virginia's 2010 rules, how were manufactured homes, modular homes, setup materials, installation contracts, and resale certificates taxed?
The historical treatment depended on the home and transaction. Manufactured homes generally entered the motor-vehicle tax system, with qualifying setup components included in that taxable sales price.…
Was injectable tuberculin antigen exempt from Virginia sales and use tax when a licensed medical practice bought it for professional use?
Yes. The Department treated the injectable tuberculin antigen as a prescription drug and Schedule VI controlled substance, distinct from the taxable TB tine testing device addressed in an earlier ruli…
Were subscriptions to an online commercial-information database, upgraded data packages, and web workflow tools taxable in Virginia?
No. The core online database, upgraded electronic data packages, and web-based workflow add-ons were nontaxable service transactions because customers received no tangible personal property or softwar…
Could a federal IT contractor invalidate Virginia's audit sample or claim resale treatment for hardware tied to government contracts?
Not on the record presented. Virginia upheld the audit sample because recurring computer-hardware purchases made the large transaction representative rather than isolated. The taxpayer also had not co…
Were wastewater-treatment chemicals exempt as pollution-control property, and did customer direct-payment permits protect prior sales?
The wastewater chemicals remained taxable because the company had not shown that its wastewater system was certified pollution-control equipment. But direct-payment permits from two customers were val…
Are charcoal briquettes sold for outdoor home cooking exempt from Virginia sales tax as fuel used for domestic consumption?
No. Virginia's domestic-consumption exemption specifically covered artificial or propane gas, firewood, coal, and home heating oil. Although the regulation said domestic use could include cooking, it …
Are custom-fitted sports mouth guards exempt from Virginia sales tax as dental services, durable medical equipment, or prosthetic devices?
No. The sports mouth guards were taxable tangible personal property, not exempt durable medical equipment or prosthetic devices. The dental-supply retailer could sell them to dentists tax-free for res…
How should a hotel calculate Virginia's continuous-occupancy exemption when an airline rents a changing number of rooms each day?
The hotel had to apply a rolling daily count rather than start each 90-day measurement period on the first of the month. Each day began a new continuous-occupancy period. Using that approach, the airl…
Can a Virginia dealer offset an audit assessment by claiming its customers paid use tax on the same untaxed sales?
Only with verification. The dealer remained liable because it had no exemption certificates or direct-payment permits and did not prove that its customers correctly paid use tax on the same sales. A c…
Must a Virginia auctioneer collect sales tax on storage-unit lien auctions, and did later Live Chat advice cancel the audit liability?
Yes. An auctioneer generally must collect Virginia sales tax on taxable property sold at storage-unit lien auctions; those sales were not exempt occasional sales. Alleged oral advice was undocumented,…
Were purging compounds used to clean plastic injection lines between production runs exempt from Virginia use tax as manufacturing supplies?
No. The compounds cleaned injection lines only after production stopped and before the next run, generally every one to four days. Virginia treated that activity as general maintenance rather than an …
Were injectable dermal fillers used for HIV-treatment-related facial lipoatrophy exempt from Virginia sales and use tax as prosthetic devices?
No. Virginia found that the temporary dermal filler restored facial volume and improved appearance but did not replace a missing body part or bodily function. It therefore remained a cosmetic treatmen…
Which Virginia software, support, training, and hosted-access charges were taxable when some software was delivered on CD and some electronically?
The initial CD-delivered software package was taxable in full, including bundled training and support, because its true object was tangible software. Electronically activated add-on modules, electroni…
Were safety supplies sold to Virginia manufacturers exempt merely because production workers used them?
No. Most listed safety, first-aid, lighting, spill-control, and accident-prevention items were taxable because they were not an immediate part of production. Reflective vests used by forklift drivers …
How did Virginia estimate a cash restaurant's taxable sales when it lacked guest checks, Z-tapes, and other supporting records?
Virginia could reconstruct sales because the restaurant did not keep adequate records, and bank deposits plus cash-paid expenses could not verify all cash receipts. The auditor's 15% gross-profit-marg…
Could Virginia estimate a restaurant's underreported sales from ABC cash-register records and projections?
Yes. Virginia used sales calculated by Alcoholic Beverage Control from the restaurant's cash-register receipts and worksheets, then projected results for other audit months. Because the taxpayer provi…
Could Virginia estimate a restaurant's sales from ABC records when returns were missing or underreported?
Yes. Virginia relied on sales calculated by Alcoholic Beverage Control from the restaurant's cash-register receipts and worksheets, then used comparisons and projections for the audit periods. The tax…
Could single-use sinus catheter systems be sold tax-free to licensed physicians in Virginia?
Yes, but only for patient-specific purchases. Virginia allowed the catheter systems to be sold exempt to a licensed physician when the physician provided documentation showing the system was purchased…
Were boom lifts, welders, and similar tools rented by contractors to install manufacturing equipment exempt from Virginia sales tax?
No. The contractors' lifts, welders, and similar tools were used before production could begin and were not an immediate part of manufacturing, so their rentals or purchases were taxable. Contractors …
Did a Virginia franchise-store operator prove that certain food sales qualified for the reduced sales-tax rate?
Not yet. The operator's studies and appeal documents did not reconcile with its returns or prove that the assessed food sales qualified for Virginia's reduced rate under the 80% prepared-food rule. Th…
Did Virginia sales tax apply to rentals of pools, a gymnasium, and outdoor sports facilities when no tangible property was included?
No. The pools, indoor gymnasium, and outdoor sports facilities were real property rather than tangible personal property. Because the rentals for camps and team practices included no tangible property…
Were mastectomy bras sold for use with prosthetic breasts exempt from Virginia sales tax as durable medical equipment or related supplies?
No. The mastectomy bras did not qualify as durable medical equipment because they did not serve the medical purpose required by the statute. They also were not exempt supplies for a breast prosthesis …
Did an electrical contractor owe Virginia use tax on materials delivered in Virginia after its vendor charged another state's 7% sales tax?
Yes. The materials were delivered in Virginia for use in real-property contracts, so the contractor owed Virginia's 5% use tax even though the vendor had charged and remitted another state's 7% sales …
Were loyalty-program membership fees taxable when members received future purchase discounts but no free merchandise?
No. New documentation showed that the loyalty membership transferred no merchandise when sold and promised only future discounts: $10 during the member's birthday month, $15 after four points, and $25…
Which lost-pet recovery products and service packages were taxable under Virginia sales and use tax?
Pet-recovery service fees were nontaxable, including lump-sum packages with an incidental microchip or implantation, because customers' true object was database and recovery assistance. Stand-alone sa…
Were charges for coordinating drayage, rentals, and other vendor services for customer-owned trade-show exhibits subject to Virginia sales tax?
No. For customer-owned exhibits, the customer's true object was the company's expertise in coordinating third-party support services, so the drayage and rental charges assessed in the audit were remov…
Did a paint manufacturer make a taxable Virginia use of color cards shipped with paint to a retailer for customer selection?
No. The cards were bundled with paint outside Virginia, delivered by common carrier, and unpacked and placed in display racks by the retailer. The manufacturer's representatives were not responsible f…
Which audited sales could an industrial supplier remove using exemption certificates obtained or corrected after the transactions?
Only some sales. Certificates obtained after the transactions received closer scrutiny and had to match each customer's actual use. Virginia allowed removal of two packaging sales to one customer for …
Were banquet rooms, equipment, and setup charges taxable when a Virginia caterer served nonprofit customers?
Generally yes. Nonprofit status did not exempt room accommodations, and no qualifying written Department advice supported abatement. Audio/visual and similar equipment rentals were taxable unless the …
Were chemicals used directly to purify, disinfect, stabilize, and protect water sold by a Virginia utility exempt from sales and use tax?
Yes, based on the described uses. Virginia treated the water utility as an industrial processor and found every listed chemical appeared to be used directly in treatment, to preserve the water's integ…
Did a hotel's purchase of assets from a special-purpose affiliated LLC qualify for Virginia's occasional-sale exemption?
Undetermined. The LLC was a separate legal entity, so its parent's regular hotel-development business did not automatically defeat the exemption. But the record did not show whether the parent or LLC …
Who had to collect Virginia sales tax when the supplier billed and collected from large retailers but paid distributors to service the accounts?
The supplier did. Although independent distributors delivered and serviced the accounts, the Pennsylvania supplier recorded the large-retailer sale, collected the retailer's receivable, reduced the di…
Which charges were taxable when a wholesaler rented beverage-gas tanks and sold carbon dioxide or nitrogen for drinks?
Tank and container rentals were taxable. Carbon dioxide and nitrogen that became part of fountain drinks or beer could be sold exempt with a valid resale certificate. If rental and gas charges were no…
How did Virginia sales tax apply to automotive core charges, later core returns, exchanges, and partial refunds?
All core charges were taxable when imposed because they were part of the sales price. Tax was refundable when the part and core charge were fully refunded, proportionally refundable with a partial par…
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…
When did Virginia retail sales and use tax apply to dyed diesel and other fuel not subject to the Virginia Fuels Tax?
Retail sales and use tax generally applied to fuel not subject to the Virginia Fuels Tax, including dyed diesel and other nonhighway fuel, unless a specific exemption and valid certificate applied. De…
Were dental crowns, cements, sealants, resins, and similar products exempt as prescription or nonprescription drugs?
Generally no. Virginia relied on FDA classification: items classified as medical devices did not qualify for the prescription or nonprescription drug exemptions merely because they contained drugs or …
Was a custom digital orthophotograph taxable because the completed image was delivered on a CD?
No. The true object was the professional photogrammetric work—flight, photography, triangulation, scanning, geometric correction, and production of the digital image—not the CD used to deliver it. Vir…
Did a real-property contractor owe use tax when vendors failed to separately charge tax on materials, pumping, countertops, and government-job purchases?
Yes. A real-property contractor was the user and consumer of materials used in its contracts and had to accrue use tax when vendors did not collect it. Unsupported statements that tax was included or …
Were a nonprofit children's museum's birthday-party packages taxable sales of property or exempt service transactions?
They were exempt service transactions. Under the true-object test, customers bought the facilitated museum birthday experience, not the decorations, craft supplies, goodie bags, or other property incl…
Could a sheet-metal contractor overturn an audit sample, obtain credits, or limit the audit period based on alleged Department advice?
No. The contractor did not prove that the audit sample was unrepresentative, that it was entitled to credits for tax paid on items later sold, or that it had received qualifying erroneous written advi…
Did a communications-equipment seller prove that Virginia's three-month audit sample was flawed or that a detailed audit and more customer-use-tax credits were required?
No. The taxpayer selected a block sample instead of the Department's broader Invoice Capture Tool procedure and did not prove that the three-month sample was unrepresentative or flawed. A detailed aud…
Was a computer fee taxable when computers were supplied with online tutorial services, and who owed tax on the computers?
The fee charged to educational institutions was not taxable because the true object was online tutorial service and students could use another computer. But the provider was the taxable user and consu…
Did Virginia tax apply when vendors shipped goods directly to a company's franchisees outside Virginia under out-of-state delivery contracts?
No. The contracts required delivery to recipients outside Virginia, and the transactions were not completed until the goods were physically delivered there. Virginia agreed that those sales qualified …
Were exemption certificates alone enough to support a retailer's exempt sales, and were cardboard roof protectors exempt packaging?
No on both issues. Properly completed exemption certificates did not eliminate the retailer's duty to provide transaction records showing that the purchases qualified, including whether exempt-organiz…
Which purchases qualified for Virginia's manufacturing exemption in a furniture manufacturer's use-tax audit?
Virginia granted limited adjustments but upheld most contested tax. Items merely essential, facilitative, used for maintenance, or used after production were not directly used in manufacturing; in-hou…
When did the Fairfax County Circuit Court say a dealer acted in good faith when accepting a sales-tax exemption certificate?
The court said a dealer could establish good faith and reasonable care if the certificate facially covered a potentially exempt use, or if the dealer's actual knowledge reasonably supported the purcha…
Did Virginia's forest-products harvester exemption cover equipment and supplies used by a woodland-renovation land-clearing business?
No. Virginia's agricultural statute did not create a general exemption for farming-related work. The forest-products provision covered persons engaged in severing forest products for sale or for use i…
Did Virginia's occasional-sale exemption apply when equipment moved from a liquidated company through an owner to a successor business?
Mostly. Virginia treated the transfers as sales, but the owner's transfer of four documented pieces of equipment to the successor business qualified as an occasional sale because the owner did not use…
Was a communications provider the taxable user of customer-premises equipment even though it separately charged customers tax on equipment leases?
Yes. The customers' true object was communications service, not the equipment, so the provider was the taxable user of equipment capitalized and used to deliver that service. The separate communicatio…
Did valid resale exemption certificates protect a Virginia dealer from tax on paper and office-supply sales to two customers?
Yes. The dealer timely received signed resale certificates containing the information Virginia law required, and the certificates stated that purchases were for resale unless a purchase order said oth…
Were lump-sum charges for electrostatic powder coating of customer-owned products taxable fabrication in Virginia?
Yes. Virginia treated electrostatic powder coating embedded by heat as fabrication that changed the form or state of customer-owned tangible property. The full lump-sum labor-and-material charge was t…
Did plastic strapping used to secure lumber bundles for shipment qualify as exempt packaging or property bought for resale?
No. Virginia narrowly defined packaging as placing goods in a package or container. Plastic strapping merely wrapped and restrained lumber bundles for transport, making it a taxable transportation dev…
Did a microarray scanner used only to study competing technology and develop a new scanner qualify for Virginia's R&D exemption?
Yes. The manufacturer did not use the purchased scanner in manufacturing or administration. It analyzed the scanner's technology solely to help develop its own comparable product. Virginia treated tha…
Could Virginia estimate restaurant cash sales and untaxed purchases when the operators' records were missing or unverifiable?
Yes. Missing register tapes, sales logs, bank statements, and purchase records allowed Virginia to reconstruct the restaurants' liabilities from the best information available. The credit-card-based c…
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 an installer of athletic floor tiles and other permanently installed property a retailer or a using and consuming contractor in Virginia?
Virginia treated the installer as a using and consuming contractor. It did not maintain the retail or wholesale place of business and inventory required for retailer treatment, and it sold no products…
How did Virginia sales tax apply to supermarket rewards, retailer-funded discounts, nominal prices, and manufacturer-funded coupons?
Retailer-funded rewards generally reduced the taxable sales price. A free item earned through qualifying purchases was not taxed again at redemption, reward tickets and points worked like retailer cou…
Did a Virginia orthopaedic-implant seller owe use tax on instrument kits removed from resale inventory and provided free to hospitals?
It depended on the hospital. Instrument kits removed from resale inventory and donated to a § 501(c)(3) organization were exempt. If a hospital lacked that designation, the seller owed use tax on the …
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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.