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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When could a Virginia government contractor buy property tax-free as the government's purchasing agent?
Only when the contractor was officially designated to buy in the government's name and the government's credit was directly bound to vendors. The documents and actual conduct had to make the governmen…
Was an out-of-state company that furnished and installed fences in Virginia a retailer required to collect Virginia sales tax?
Yes. The company met Virginia's retailer criteria for fence sellers and had enough Virginia activity to register and collect tax. Its other-state contractor theory and tax-credit claim lacked proof. T…
Was a parts-and-labor maintenance contract for machinery used directly in manufacturing exempt from Virginia sales tax despite a late exemption certificate?
Yes. The exemption certificate obtained after the contract sale was not valid for that transaction, but Virginia independently confirmed that the contract serviced exempt machinery used directly in ma…
Could an ice cream parlor keep the difference after collecting Virginia's general sales tax rate but filing returns at the reduced food rate?
No. Although an ice cream parlor could charge the reduced rate on eligible food packaged for home consumption, this business actually collected the general rate and remitted only the reduced-rate amou…
Which subcontractor-furnished landscaping, concrete, and refrigeration items remained taxable in a Virginia general contractor's audit?
Virginia partly revised the audit. Landscaping subcontractors performing real-property work were the taxable users of installed plant and irrigation materials, so those items were removed. Concrete en…
Did a parent's purchase and accounting transfer of equipment to its subsidiary count as one Virginia sales-tax transaction?
No. The vendor sale to the parent and the parent's transfer to its subsidiary were separate transactions because intercompany accounting entries were consideration. The parent could buy the equipment …
Could a Virginia contractor use its mining customers' exemption certificates for equipment used at mine, gas-well, and reclamation projects?
Not on the record provided. The contractor did not prove that the audited equipment was used directly in qualifying mining, gas, or legally required well-area reclamation activities. It also could not…
Did Virginia's occasional-sale exemption cover equipment transferred to a subsidiary in a corporate spinoff?
Yes. The transfer of all electronic-medical-records assets and equipment to a subsidiary for stock was a reorganization of the business and qualified for Virginia's occasional-sale exemption. The tran…
Could a restaurant overturn a reconstructed sales-tax audit after it deducted voluntary gratuities twice and disputed overpayment credits?
No. Virginia upheld the audit method because the restaurant repeatedly deducted voluntary gratuities twice and did not prove the reconstruction unreasonable. The auditor used tax collected, backed out…
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…
How did Virginia revise a ship repair facility's use-tax audit, and how could it recover sales tax paid to vendors on exempt property?
Virginia revised the paid audit to remove or credit several items and ordered a refund with interest. For separate sales tax paid to vendors on qualifying ship-repair property or nontaxable mobile off…
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…
Which servers, power, cooling, monitoring, software, security, and building items qualified under Virginia's 2010 data-center sales-tax exemption?
Most listed operational equipment qualified if used in a data center meeting the investment, job, wage, and memorandum requirements. Virginia treated computing, network, power, cooling, control, rack,…
Could a registered consumer-use-tax taxpayer overturn an estimated assessment after filing no returns, producing no records, and submitting an incomplete appeal?
No. Virginia upheld the estimate because the taxpayer filed no use-tax returns and produced no business records despite repeated audit requests. Its protest also failed to become a complete appeal wit…
Could a mechanical contractor remove Virginia audit items using permits, late or undated exemption certificates, and cost estimates?
No. Virginia kept every contested item in the audit. Purchase orders and federal permits were not the state certification required for pollution-control equipment; a late, undated manufacturing certif…
Which floors, HVAC, electrical, hydraulic, pneumatic, ventilation, gas, paint-booth, freezer, and inspection items qualified for Virginia's manufacturing exemption?
The result was item-specific. Virginia exempted direct production systems such as hydraulics, qualifying chillers, production pneumatic lines, milling-room downdraft ventilation, production natural ga…
What state and local tax legislation did Virginia's Department of Taxation summarize for the 2010 General Assembly session?
This was a broad historical guide, not a taxpayer-specific ruling. It summarized 2010 legislation enacted through the April 21 reconvened session, including a shorter state collection period, expanded…
Could Virginia convert a bankrupt corporation's unpaid use and withholding taxes to its president and majority shareholder?
No, on these facts. Although the taxpayer's titles and ownership gave him authority, Virginia found that he was not under the relevant duty to pay the taxes, lacked actual knowledge before other debts…
Could a phone-system installer credit sales tax wrongly collected from customers against use tax owed on cable installed in walls?
No. Cable permanently installed in walls made the business a consuming contractor liable for tax on the cable's cost. Sales tax wrongly collected from customers could not offset that use-tax liability…
Was a cabinet fabricator a retailer when its office showed unsaleable sample cabinets and it bought primary materials for accepted jobs rather than general inventory?
No, for the installed cabinets on these facts. Unsaleable sample cabinets on office walls did not create a showroom, and materials purchased for accepted jobs did not satisfy the general inventory req…
Was a medical practice's one-time sale of imaging-center fixed assets taxable when the practice made no regular retail sales and was not required to register?
No. Virginia treated the fixed-asset transfer as an exempt occasional sale. The radiology practice did not regularly sell tangible personal property, was not required to register for retail sales tax,…
Did a lumber manufacturer's strapping machine and reusable strapping qualify as exempt packaging materials?
No. Virginia treated the strapping as a transportation device used to bundle, restrain, and secure lumber for shipment, not material that placed the product into a protective wrapper or container. The…
Did Virginia remove use tax assessed on a manufacturer's software, checks, forklift, maintenance supplies, and other purchases?
No. The manufacturer did not document that disputed software, laser checks, repair items, rentals, petroleum products, or supplies were returned or used exemptly. Its forklift was used more than 80% o…
Could Virginia assess masonry contractors purchaser use tax on third-party charges for cutting their bricks?
No. Cutting the contractors' bricks changed their shape and was taxable fabrication, so Virginia could assess the fabricator sales tax on the service. But under the circuit-court decision applied here…
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…
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…
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 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…
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…
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…
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…
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 equipment used by an Internet-service parent and subsidiary qualify for Virginia's ISP sales-tax exemption?
Yes. Virginia found the group supplied Internet access, email, and proprietary content developed and owned by the providers, including qualifying web-page or screen content for messaging, directories,…
Were detention charges paid by truckers for keeping intermodal shipping containers beyond free time taxable rentals?
No. Truckers possessed and used the containers without taking title, but that alone did not create a taxable lease. The Uniform Intermodal Interchange and Facilities Access Agreement governed equipmen…
Who collected Virginia sales tax when a catering platform took orders, arranged delivery, marked up meals, and received customer payments?
The platform vendor was the retail seller. It advertised menus, took and routed orders, arranged delivery, approved credit, collected customer payments, and added markup and service fees. It therefore…
Did a notice of intent and incomplete protest preserve Virginia's 90-day deadline for appealing a sales-tax assessment?
No. The June 2, 2009 assessment required a complete administrative appeal by August 31. The taxpayer sent a notice of intent and an August protest without supporting documentation or statutory grounds…
Could a Virginia church appoint its construction contractor as purchasing agent so project materials used the church's sales-tax exemption?
No. Virginia's church exemption covered building materials only when the qualifying church installed them itself through staff or volunteers and did not contract for installation. Naming the contracto…
Was a nominal hotel fee for cancelling after a deadline subject to Virginia retail sales tax?
No. Additional charges connected with an actual room rental were taxable, but this customer cancelled, never paid the room price, and never obtained a right to possess the room. The nominal charge was…
Did a hotel buy guest toiletries for resale, and could it redact federal credit-card numbers to only the last four digits?
The hotel was the user and consumer of toilet paper, tissues, shampoo, and similar room amenities, so it had to pay tax when buying them even though guests paid tax on lodging. For federal-government …
Did a third-party yearbook ordering service collect Virginia sales tax when acting for public or nonprofit schools?
For public schools, no tax applied when the school gave the manufacturer Form ST-12; the third-party order service acted as the school's agent and could collect student payments without tax. A private…
Did Virginia's occasional-sale exemption cover business assets bought during a bankrupt seller's five-month liquidation and reorganization?
Yes. The bankrupt seller sold business divisions to five entities over five months under an orderly liquidation and reorganization plan. Even though some branded consulting operations continued outsid…
Were bulk sales of the Mirena intrauterine contraceptive to licensed physicians, hospitals, and clinics exempt from Virginia sales tax?
Yes. Virginia treated Mirena, an intrauterine device that releases levonorgestrel, as a Schedule VI controlled drug. The wholesaler could sell it tax-free to licensed physicians, optometrists, nurse p…
Did a late, facially invalid resale certificate exempt a medical-equipment maintenance agreement billed through a third-party vendor?
No. The seller obtained the certificate after the audit began, so it faced greater scrutiny and had to prove the specific transaction qualified. The form improperly listed both the third-party vendor …
Was a Virginia sales-tax appeal timely when it was dated September 1 after an August 31 deadline?
No. The assessment was issued June 2, 2009, making August 31 the deadline for applying to the Tax Commissioner. The taxpayer's correspondence was dated September 1 and received September 2. Virginia h…
Was a hand-delivered Virginia sales-tax appeal timely when the Department received it on the 91st day after assessment?
No. Assessments issued June 26, 2009 required a complete appeal by Thursday, September 24. The taxpayer delivered a notice of intent in August but hand-delivered the actual appeal on September 25, the…
How did Virginia respond when U.S. diplomatic sales-tax exemption cards moved the exemption details from the front to the reverse?
Virginia agreed to update its regulation and dealer guidance. The U.S. Department of State had redesigned diplomatic tax-exemption cards so the extent of a mission's or individual's exemption appeared…
Could a flooring contractor offset use tax with sales tax it had wrongly billed to customers on real-property jobs?
Not directly. As a real-property contractor, the business owed use tax on untaxed flooring materials and could not satisfy that liability with sales tax wrongly billed to customers. Erroneously collec…
Were Nepro, Jevity, Glucerna, and Ensure purchased for inmates exempt from Virginia sales and use tax as medicines or medical supplies?
Only in part. The products were not exempt merely as medicines, drugs, or dialysis supplies because food is excluded from the drug definition. Products prescribed for specific inmates and used with en…
Did torque wrenches used to install die heads before production qualify for Virginia's manufacturing exemption?
No. The torque wrenches were used before production to install die heads and incidentally to replace damaged heads, not during production or in an exempt subprocessing activity. Although essential to …
Did remotely managed servers placed with Virginia customers create sales-tax duties for an out-of-state software company?
Virginia said the facts did not clearly establish whether the company was a service provider or a lessor. As a service provider, it would owe Virginia tax on servers, software delivered on them, and o…
Were the initial card charge and annual fee for a prescription savings club subject to Virginia sales tax?
No. Members paid for a program card and annual enrollment, receiving discounts on selected prescription drugs and a 10% rebate or credit on private-label purchases. Because club membership did not ent…
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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.