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 three appraisals and an aborted asset sale prove a county's 2008-2009 machinery-and-tools values exceeded fair market value?
No. The county uniformly valued machinery using a percentage of capitalized cost. Two appraisals valued the whole company rather than only machinery and tools; the county considered a third equipment-…
Did a Virginia direct-mail advertiser owe use tax on postcards printed outside Virginia and mailed without its possession or use in the state?
No. Advertising status made the company the consumer of property it used in Virginia, but it did not possess, take title to, or exercise rights over these postcards in the Commonwealth. The out-of-sta…
Did a Virginia advertiser use postcards in the state when an out-of-state printer sent them directly into the mail?
No. The Virginia advertiser supplied designs and mailing lists, but an out-of-state printer produced and prepared the postcards for mailing. The advertiser did not take possession or title or exercise…
Which Virginia dealer discounts were reduced or suspended beginning with returns filed in mid-2010?
Beginning mainly with the June 2010 return due July 20, mandatory-EFT sales-tax dealers lost their discount, while other sales, vending, and digital-media filers moved to lower tiered discounts. Disco…
Were unmanned cardlock fuel sales to commercial, institutional, and government fleets wholesale sales for Virginia BPOL tax?
Yes. The cardlock sites served institutional, governmental, and commercial customers rather than the public, supported oversized fleet vehicles and high-speed fueling, and used wholesale-style market …
Were unmanned cardlock petroleum terminals definite places of business for Virginia local BPOL tax?
Yes. The terminals lacked offices, mail, records, and continuously stationed employees, but the operator owned or leased each site, installed and ran the automated pumps, maintained and inspected them…
Could Virginia residents claim all partnership tax paid through unified returns in five states as one out-of-state credit?
No. Virginia's resident credit was the lesser of the tax actually paid to a state or the Virginia tax attributable to that state's income. When a partnership filed unified returns in five states, the …
Did a county have to reconsider machinery values and earlier-year asset classifications after a manufacturer supplied appraisals and evidence?
Yes, in part. Virginia remanded the 2007 valuation because § 58.1-3507(B) required the county to consider the manufacturer's bona fide independent appraisals, including a new exchange-value appraisal.…
Could a separated spouse claim half of a conservation credit when Department transfer forms named only her husband?
No. The prescribed transfer notification and Department records named the husband as the sole transferee, so Virginia properly allowed him the full credit on his separate 2006 return. The Department c…
Did a Virginia steamship agent owe sales tax on commission income and a per-diem invoice involving shipping containers?
Not on the limited record. An invoice showed a fixed daily per-diem charge for a 'unit,' but Virginia could not determine that the charge involved tangible personal property. Nothing showed that the a…
Were beauty-store loyalty memberships taxable when members received discounts and became entitled to free gifts?
Yes. The retailer argued that its program terms were misleading and that memberships did not include free property, but its operations manual said members received a $10 birthday discount and free gif…
Did five federally taxable survivor-annuity lump sums qualify for Virginia's death-benefit subtraction?
Yes. Each payment came from an annuity contract between the deceased father and an insurance company, was paid to the beneficiary as a lump sum, and was included in federal taxable income. Those facts…
Was a construction dust-and-debris protection service exempt from Virginia sales tax when temporary plastic was installed and removed?
Yes. Virginia found that customers were buying construction dust-and-debris protection and removal, while the temporary plastic was incidental, so the service charge was exempt. The provider was still…
Could a business use 2008 receipts for its final BPOL year instead of the prior year's base receipts merely by saying it had ceased operations?
Not merely from the assertion. Virginia held that the city correctly computed 2008 BPOL from 2007 base-year gross receipts; a final-year proration also used the base year. But permanent cessation was …
Could Virginia recover a refund increase caused by itemized deductions overstated on the taxpayers' own return?
Yes. The couple had correctly stated the refund they expected, but they entered an incorrect itemized-deduction amount on the filed return. The Department processed that line and increased the overpay…
Were 1993 amended Virginia returns timely when IRS adjustments for 1984-1989 continued after the Department's claimed final date?
Yes for the 1984-1989 federal changes. IRS notices showed that adjustments continued beyond the 1992 reports, so the October 1993 amended Virginia returns preceded the relevant 1994 or 1996 final dete…
Could a taxpayer overturn a 1991 Virginia assessment in 2009 by arguing income-tax filing was voluntary and IRS data was illegal?
No. The assessment was issued April 8, 1994, but the taxpayer did not appeal until January 2009, long after even Virginia's former three-year administrative-appeal policy for pre-August 2003 assessmen…
Was a refund a Department error when the electronic return claimed an out-of-state credit that did not appear on the taxpayers' printed copy?
No. Department records showed that the electronically transmitted return included an out-of-state tax credit and North Carolina withholding data. The printed software copy showing no credit might not …
Did a federally chartered savings association remain a 'bank' subject to Virginia bank franchise tax instead of corporate income tax?
No. Virginia ruled that a federal savings association was not a 'bank' under the state's bank franchise tax definition. After the institution changed status in early 2008, it had to file a Virginia co…
Did the 2009 Military Spouses Residency Relief Act exempt a service member's minor child from Virginia tax for 2006?
No. The minor could share her parents' out-of-state domicile yet still be a Virginia actual resident because she lived in the Commonwealth for more than 183 days. Virginia could tax all of a resident'…
Could a Virginia resident claim all joint itemized deductions when her nonresident military spouse's income funded a joint bank account?
No. A resident and nonresident spouse filing separately had to account for deductions separately or allocate inseparable items in proportion to income. Because the expenses came from a joint bank acco…
Did a missionary remain domiciled in Virginia because he kept a Virginia license, voter registration, and mailing address while living abroad?
No. The taxpayer had lived abroad since July 2003, worked there full time, rented a permanent home, lived with his spouse and children, and spent all of 2006 outside Virginia. A Virginia mailing addre…
Did moving to another state and taking a foreign assignment end Virginia domicile when the taxpayer kept his family, home, vehicles, voting, and license there?
No. Renting a room in another state, declaring it as an employer home of record, and working abroad showed some intent to move. But the taxpayer kept the Virginia home where his spouse and children li…
Could a for-profit school treat textbooks bundled with tuition as resold to students and remit tax through a revenue percentage?
No. The enrollment agreements stated no separate textbook price or sales tax, so the true object of the lump-sum transaction was educational service. The school was the consumer of books used in that …
Did a for-profit school's 2.5%-of-revenue payment satisfy tax on textbooks bundled into tuition and fees?
No. The enrollment agreements stated no separate textbook sales price or tax, so the true object of the lump-sum transaction was training. The school consumed textbooks in providing that service and o…
Who owed Virginia tax on textbooks bundled into a for-profit school's lump-sum tuition—the school or its students?
The school owed tax on its textbook cost. Because tuition, books, and fees were billed together, the transaction's true object was educational service, not a separate retail textbook sale. The school …
How did Virginia resolve sales-tax and withholding audits when an interior designer kept almost no business records?
Virginia reached a split result. The business sold property, collected sales tax, never registered or filed, retained the money, and produced only bank statements and canceled checks. Virginia upheld …
Could a bakery use Virginia's reduced food rate for cold takeout sandwiches and exempt organizational sales without separate records or certificates?
Only with proof. Cold food packaged for takeout could qualify for the reduced rate, and this business was below the 80% immediate-consumption threshold, but it had not kept separate records for qualif…
How did Virginia's original 2010 accelerated sales-tax payment rules work for million-dollar dealers?
These superseded 2010 guidelines required dealers with at least $1 million in prior-fiscal-year taxable sales or purchases to prepay 90% of the previous June's liability by June 25 by mail or June 30 …
Could shareholders claim a recycling-equipment credit earned by a corporation in 2004 and later carried into its S-corporation years?
No. Virginia's individual recycling-equipment credit expired after 2003, while legislation allowing individuals to receive the corporate credit through pass-through entities applied only for 2008 and …
Did Virginia state agencies and political subdivisions owe the tire recycling fee on tires, including replacement truck tires?
No. Because the tire-recycling-fee chapter incorporated the retail sales-and-use-tax exemptions, all tires bought by the Commonwealth or its political subdivisions were exempt, including replacement t…
Were subscriptions, online training, and analytic services taxable when contracted with software delivered in tangible form?
Yes. Each contested service was contracted in connection with software delivered in tangible form. Virginia treated that software as taxable property and found it was the true object of the purchase a…
Did five months living and working in another state make a Virginia domiciliary resident a part-year resident for 2005?
No. The taxpayer said the out-of-state move was temporary, lived with relatives, returned to Virginia after the assignment, and spent 237 days in Virginia during 2005. She did not prove abandonment of…
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 Virginia fixed-date conformity require a 2007 subtraction for foreign dividends included in federal adjusted gross income?
No. The foreign dividends were included in federal adjusted gross income, but Virginia's former foreign-source subtraction had been expressly repealed for tax years beginning in 2003 and later. Fixed-…
Did a military spouse remain a Virginia resident in 2003 after leaving her job and home to establish a household and employment abroad?
No. When her service-member spouse transferred abroad in 2001, she ended Virginia employment, vacated the home, moved her child, established a permanent foreign residence, enrolled the child in school…
Could Virginia waive the refund deadline because an accountant failed to prepare a return and the taxpayer later became severely disabled?
No. The 2003 return was due May 1, 2004, and the refund period expired May 1, 2007—or November 1, 2007 with an extension—before the March 31, 2008 filing. Virginia could not enlarge the statutory peri…
How did Virginia tax severance and dividends when a couple moved out of the state during 2007?
All periodic payments remained Virginia-taxable severance because the agreement expressly called them severance and assigned no consideration to the later noncompetition covenant; an unsupported one-t…
Could a law firm remove receipts generated by lawyers who left at year-end from the next year's local BPOL base?
No. The city ordinance computed a previously licensed business's current BPOL tax from receipts earned in the base year, and Virginia defined the preceding calendar year as the base year unless the or…
How did Virginia BPOL apply to a beverage maker's plants, warehouses, cross-docks, and vending-machine sales?
Qualifying manufacturing and wholesale sales at the plants were exempt. Warehousing and cross-docking appeared ancillary to manufacturing, so wholesale product receipts were also exempt at those facil…
Was a producer of three-dimensional holograms a manufacturer for Virginia local BPOL and machinery-and-tools tax purposes?
Yes. The laser and heat process transformed two-dimensional images and raw film into substantially different holograms, and the hobby kits were also new products made from combined materials. Wholesal…
Who had to determine fair market value when assessed real-estate value exceeded deed consideration for Virginia grantor tax?
The local circuit-court clerk. After the 2007 amendment, grantor tax used the greater of consideration or property value. Assessed value carried a strong presumption but was not conclusive; clear and …
Was a military spouse still a Virginia resident in 2006 and 2007 after moving abroad with her husband and later moving to another state?
No. She ended Virginia employment, sold her Virginia home and vehicle, moved all tangible property abroad, obtained a foreign driver's license and permanent home, spent no days in Virginia during 2006…
Could a Virginia taxpayer exclude qualified dividends from 2005 federal adjusted gross income after the IRS included them?
No. Qualified dividends remained part of federal adjusted gross income even though federal law taxed them at capital-gain rates. Virginia began with the IRS-corrected federal amount and offered neithe…
Could a Virginia resident claim all mortgage deductions from a joint federal return when her spouse was a nonresident?
Yes. When the Virginia resident filed separately from her nonresident military spouse, deductions had to be separately accounted for or otherwise divided by income. Bank statements showed their wages …
Did a Virginia LLC owner remain domiciled in Virginia, and how much of his salary was Virginia-source income?
Virginia found he had abandoned Commonwealth domicile despite owning half of a Virginia LLC, working there at peak times, and retaining a Virginia house and registered vehicles. His out-of-state home,…
How should a semi-retired nonresident allocate salary and management fees for days worked in Virginia?
Both income streams were allocated by where the husband actually performed services. For this semi-retired owner who worked 140 days per year, Virginia accepted documentation supporting 10 Virginia wo…
Could a federal contractor buy hardware under a mixed task order for resale and transfer it tax-free to the federal government?
Yes, on the facts presented. Although CLIN 14 listed hardware as other direct costs and required no separate true-object analysis, Virginia examined the mixed task order as a whole. Its primary object…
Were computerized printing presses and related equipment subject to Virginia local machinery-and-tools tax?
Yes. Built-in computers operating high-speed presses, cutters, plate makers, and pocket folders were integral to and directly used in the printing process, so the combined equipment was machinery and …
Could a Virginia city collect consumer utility tax assessments after the five-year local-tax collection period expired during the appeal?
No. Virginia's general local-tax collection statute allowed enforcement for five years after December 31 of the assessment year, and the consumer utility tax appeal statute did not extend that deadlin…
How did Virginia Tax Bulletin 10-4 change 2009 returns when the Commonwealth advanced federal conformity to January 22, 2010?
The historical bulletin generally conformed 2009 Virginia income tax returns to federal law through January 22, 2010, but kept exceptions for five-year NOL carrybacks, most bonus depreciation, applica…
Could Virginia allocate itemized deductions by income when a resident spouse filed separately from a nonresident service member?
Yes. A resident and nonresident spouse filing separately had to account individually for income, deductions, and exemptions. When the resident spouse could not show which deductions she paid from her …
Was a 0.5% community-development facilities charge collected with taxable retail sales itself subject to Virginia sales tax?
Yes. Retailers in the development district collected a 0.5% facilities charge from customers on transactions already subject to Virginia sales tax. Because Virginia's sales-price definition included e…
What exemption documents protected a Virginia seller of used semiconductor tools from collecting sales tax?
For a buyer claiming semiconductor-manufacturing use, a properly completed Form ST-11B accepted in good faith relieved the seller of collection liability; a buyer without a Virginia registration numbe…
Was a business that fabricated and installed most granite countertops a retailer or a real-property contractor for Virginia sales tax?
It was a using-and-consuming real-property contractor for installed countertops. The sealed countertops became residential fixtures, and more than half of receipts came from sale-and-installation jobs…
What Virginia tax assessment and refund interest rates applied during the second quarter of 2010?
Both Virginia tax underpayments and overpayments carried a 6% annual interest rate from April 1 through June 30, 2010. The corresponding federal rates remained 4%, and Virginia law added two percentag…
Were executive-education fees taxable when they included course materials, lodging, and meals?
No Virginia retail sales tax applied. The true object of the three-to-30-day open-enrollment and custom programs was professional executive education, so the full course charge—including materials, lo…
Did an out-of-state national bank owe Virginia bank franchise tax because it maintained a mortgage-loan office in the Commonwealth?
No. The nationally chartered bank had no Virginia principal-office charter, and its mortgage-loan office did not accept customer deposits. Virginia held that making loans without regular deposit-takin…
Did a national bank owe Virginia bank franchise tax merely because it operated a trust office in the Commonwealth?
No. The bank had no Virginia principal-office charter and its acquired trust office did not accept customer deposits. Virginia treated regular deposit-taking as necessary to conduct a banking business…
What annual cap applied to Virginia Land Preservation Income Tax Credits for calendar year 2010?
The historical 2010 cap was $106,845,000. Virginia began with the $100 million statutory annual limit and increased it by the percentage growth in the all-urban consumer price index for the 12 months …
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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.