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.
No Virginia rulings match these filters
Try a different search term or clear the filters.
After an S corporation's sole owner moved away, would Virginia tax the owner's share of corporate income and salary tied to continued Virginia sales work?
Yes, to the Virginia-source portions. Regular in-state sales and administration services gave the S corporation nexus and required apportionment. The nonresident owner had to report the apportioned pa…
Could nine corporate affiliates each use a separate $100,000 Land Preservation Tax Credit on one consolidated Virginia return?
Yes. The $100,000 limit applied per taxpayer, not per return. Because each of nine corporations had separately acquired a $100,000 credit, the consolidated group could claim $900,000. If one affiliate…
Did a filed federal return transcript prove that Virginia wage income was not taxable and require cancellation of an estimated 2003 assessment?
No. The transcript showed only that a federal return was filed, not that the IRS determined the Virginia wage income was nontaxable. Without documents disproving the IRS information or Virginia assess…
Were mechanical-bull and climbing-wall rentals taxable when skilled operators kept control, and did the same apply to games needing only attendants?
The mechanical bull and climbing wall were nontaxable services because skilled operators controlled them for safety. Other games needing only attendants remained taxable rentals. As a service provider…
Were setup, on-site maintenance, and pickup charges taxable when a company leased traffic-control equipment to road contractors?
Setup and maintaining charges were taxable as service charges connected with the equipment lease. Separately stated delivery and pickup transportation charges were exempt.
Were remote grid-computing charges taxable in Virginia, and what tax applied if the provider moved or bought service equipment in Virginia?
The remote grid-computing charge was nontaxable because customers received electronic access without tangible property. The provider owed tax on new equipment used in Virginia. Older equipment moved i…
Which furniture marketing items qualified for Virginia's advertising exemption: a showroom video, catalog stands, or room-planner guides?
Only the promotional video qualified. It conveyed advertising to the general public in showrooms and dealer locations. Plain catalog stands were unnecessary supports with no printing, and room-planner…
Did a customer's direct payment permit relieve a real-property contractor from tax on materials used in the customer's construction projects?
No. The contractor was the user and consumer of construction materials, not a dealer selling them to the permit holder. The customer's direct payment permit did not shift that liability. If the custom…
Did Virginia sales tax apply to Bloomingdale's orders delivered outside Virginia when title and risk of loss stayed with the seller until delivery?
No. The Richmond Circuit Court declared the 1998-2001 assessment erroneous for goods that never entered Virginia or were delivered outside Virginia while risk of loss remained with Bloomingdale's unti…
Did every discount advertisement mentioning sales tax violate Virginia's prohibition on dealers advertising that they would absorb the tax?
No. A discount advertisement could mention sales tax to assure customers that tax still applied. The prohibited conduct was offering reduction or elimination of the sales tax itself as the incentive. …
Could franchise food stores use Virginia's reduced food-tax rate when immediate-consumption sales did not exceed 80% of gross receipts?
Yes. The stores' food sales for immediate consumption were not more than 80% of total gross receipts, so the restaurant and fast-food exclusion did not apply. Qualifying cold food packaged for home or…
Were franchise, accounting, and insurance fees sales of tangible property because franchisees also received manuals and promotional materials?
No. The main purpose of the transactions was to provide franchise rights, intellectual property, accounting, marketing, advertising, and insurance benefits. Manuals and promotional materials were inci…
Could a successor use an affiliate's net operating loss deductions after a qualifying liquidation or reorganization?
Generally yes. If NOLDs carried over in an I.R.C. § 332 liquidation or § 368(a) reorganization would be allowed for federal purposes, Virginia would allow them, subject to federal limits such as I.R.C…
How did the Richmond Circuit Court resolve the consolidated DiBelardino and Dutton tax-assessment cases?
The court reached opposite results. It upheld the Department's assessment against Ezio and Stephanie DiBelardino because their Virginia property interests supplied minimum contacts sufficient for due …
Did an out-of-state corporation receiving Virginia Lottery annuity payments owe corporate income tax, and could the Lottery withhold tax anyway?
The corporation was not expected to owe Virginia corporate income tax because its apportionment factor was zero. Virginia could still require withholding on Lottery payments. The corporation could fil…
Could an investor exclude a Virginia hotel's factors and use separate accounting through an advance ruling request?
No. The hotel's income and property, payroll, and sales factors flowed through the LLC tiers to the investor. Virginia denied the requested separate-accounting method because the investor had not file…
Could an out-of-state company obtain advance permission to replace Virginia's statutory apportionment formula with separate accounting?
No. Virginia disfavored separate accounting and found no clear and cogent evidence that the statutory formula was unconstitutional or caused Virginia-attributable double taxation. The taxpayer also us…
Did out-of-state parent and guarantor corporations have Virginia income-tax nexus, and where were lease-guarantee fees sourced?
On the stated facts, the out-of-state parent and guarantor lacked Virginia income-tax nexus because they had no Virginia employees or property and performed no more than de minimis activity there. The…
Which state's income tax should a Virginia tugboat company withhold from nonresident crew working on multistate waters?
For the State A residents described, the company had to withhold State A income tax. One federal statute directed water-carrier withholding to the employee's residence or a state where more than 50% o…
Could a taxpayer challenge 2001 and 2002 Virginia residency assessments by filing an administrative appeal in April 2006?
No. Va. Code § 58.1-1821 required an appeal within 90 days of each assessment. The April 2006 filing came after the April 2004 and April 2005 deadlines, so the Tax Commissioner dismissed it as time-ba…
Which contested plant items qualified for Virginia's manufacturing exemption: a continuously applied biocide chemical or an intermittently used winch?
The CL207 biocide qualified because it continuously passed through production equipment, became part of the product, and prevented contamination. The separate winch did not qualify because it was used…
Did filter cartridges that cleaned and recirculated soluble oil on a beverage-can production line qualify for Virginia's manufacturing exemption?
Yes. The filters removed contaminants from soluble oil used by the can-forming bodymaker, protected the cans from defects, and returned the oil to the production line. Virginia found them used directl…
Did floor-to-ceiling folding partitions and permanently mounted identification signs become real property when subcontractors installed them?
Yes. The partitions and signs were attached and adapted to the buildings, and the evidence showed an intent that they remain permanently. Because the subcontractors were the taxable users of materials…
Did this 2007 ruling require an out-of-state printer with a Virginia facility to collect tax on direct-mail printing sold to Virginia advertising franchisees?
Historically, yes. It treated the franchisees as taxable users of direct-mail printing and required the printer, which had a Virginia facility, to collect tax; otherwise the franchisees owed use tax. …
When did Virginia treat a countertop fabricator as a retailer rather than a real-property contractor?
The answer depended on the fabricator's annual gross receipts. If at least 50% came from countertop sales without installation, it was principally a retailer; if at least 50% came from furnished-and-i…
What Virginia state and local tax legislation did the Department summarize for the 2007 General Assembly session?
This was a broad historical guide, not a taxpayer-specific ruling. It summarized 2007 legislation involving transportation funding, federal income-tax conformity, filing thresholds and deductions, pas…
Were separately billed HVAC system-commissioning charges taxable when the seller provided them with the equipment?
Yes. The commissioning work inspected and tested HVAC equipment sold under the seller's overall quote. Because it was provided in connection with the equipment sale, it was part of the taxable sales p…
How did Virginia apportion a nonresident broker's commissions from finding Virginia real estate?
Virginia treated the commissions as Virginia-source business income because the broker located and helped acquire Virginia real property and performed more than protected solicitation. For a sole prop…
When did a Virginia shareholder change domicile, and how were a lump-sum payment and S corporation income taxed?
The taxpayer changed domicile on December 1, 2003, when the out-of-state lease became effective—not September 30. Virginia found the December related-party lump sum was not an arm's-length prepayment …
Could a federal service contractor buy video-conferencing equipment tax-free for resale to the government?
No, for the 2003 project. The video-system subcontract's true object was tangible personal property, but the prime federal contract's true object was ongoing IT and information services. The prime con…
Could a taxpayer reopen two sales-tax audits to submit records its former bookkeeper had not provided?
Only the timely audit. The appeal from the December 24, 2003 assessment was filed years after Virginia's 90-day deadline, so that audit could not be reopened or supplemented. The appeal for the Septem…
Did a retailer's lower appraisal overturn a county's business tangible personal property valuation?
No. The taxpayer and county used accredited appraisers but reached different values because one included capitalized acquisition and installation costs. Appraisals are subjective, and the local assess…
Did a taxpayer's lower appraisal overturn a county's business tangible personal property valuation?
No. Both sides submitted professional appraisals, but appraisal differences were subjective and the county's assessment was presumed correct. The county had exercised due diligence by hiring an outsid…
Was Virginia's 2006 assessment recovering an incorrect 2003 out-of-state tax credit issued too late?
No. The refund date was when Virginia applied the amount to the taxpayer's 2004 estimated payments, not when he signed the 2003 return. The incorrect California credit came from information listed by …
Were payments to a nonresident member from Virginia franchise LLCs treated as Virginia-source income?
Yes, on the available record. The taxpayer signed a loan agreement as an LLC member, and the return information and agreement indicated payments tied to the Virginia partnerships' income or net sales …
When did a Virginia shareholder change domicile, and how were a lump-sum payment and S corporation income taxed?
The taxpayer changed domicile on December 1, 2003, when the out-of-state lease became effective—not September 30. Virginia found the December related-party lump sum was not an arm's-length prepayment …
What Virginia tax underpayment and refund interest rates applied during the third quarter of 2007?
Virginia's third-quarter 2007 rate remained 10% for tax underpayments and 10% for overpayments. The federal rates were 8%, and Virginia added two percentage points. For taxpayers whose year ended June…
Did a purchaser owe Virginia use tax on barter transactions when invoices did not separately show sales tax?
Yes. Virginia's definition of a sale includes barter, and sales tax is the purchaser's legal debt even though the dealer must collect it. The barter records showed no separately stated tax and no evid…
Could Virginia consider a corporate tax appeal filed one day after the 90-day deadline?
No. The assessments were dated October 19, 2006, and Virginia counted 90 consecutive calendar days beginning the next day, including weekends and holidays. The deadline was January 17, 2007. Because t…
Which software implementation, support, and maintenance charges could Virginia remove from a sales-tax audit?
Virginia revised the audit transaction by transaction. It kept charges where the vendor could not credibly separate exempt custom-software modification or installation from taxable testing, training, …
Could a dealer remove audited sales by obtaining customer resale certificates after the audit began?
No. Certificates obtained after an audit begins are not accepted in good faith automatically and must withstand greater scrutiny. The submitted resale certificates involved unregistered customers, inv…
When did a Virginia Land Preservation Tax Credit application over $1 million enter the 2007 allocation queue?
Only after the Department received the required DCR verification of the donation's conservation value. Virginia would not hold a tentative place in the queue while verification was pending. For 2007 d…
Could Virginia consider an individual's challenge to corporate-officer assessments filed more than two years after the latest assessment?
No. Virginia did not decide whether the individual was a corporate officer. The latest converted assessment was dated September 17, 2004, making December 16, 2004 the latest 90-day appeal deadline. Hi…
Could a State A resident amend 2001 and 2002 Virginia returns as a nonresident and claim credit after State A's tax-court decision?
Yes. Virginia found that the taxpayer never abandoned her State A domicile and was not an actual Virginia resident, so only Virginia-source income was taxable. Because State A offered a substantially …
Did resale certificates obtained after a Virginia sales-tax audit began protect a seller when the account numbers were invalid?
No. Certificates obtained after an audit begins do not receive the ordinary good-faith protection and are accepted only when Virginia can verify their valid use for the audited transaction. The submit…
Were calendars distributed to federal employees at enrollment fairs exempt Virginia media advertising?
No. The calendars promoted a health insurer's services only to federal employees attending enrollment fairs. Because that was a limited customer base rather than the general public, the calendars were…
Could a technology consultant remove a three-month software license fee from Virginia's sales-tax audit sample as an unusual purchase?
No. Virginia found that the software license purchase was not isolated: it covered up to 3,000 workspaces for three months and was reasonably part of a technology consultant's normal operations. The p…
Could a bank-equipment installer treat permanently installed and monitored-service equipment as exempt retail sales to federal credit unions?
No. Virginia treated the company as a real-property contractor for permanently installed bank equipment and as the consumer of equipment used in surveillance and monitoring services. Federal credit-un…
Did federal treatment of a partnership credit allocation as a deemed purchase require Virginia to revoke Historic Rehabilitation Credits?
No. On the hypothetical facts in IRS AM 2007-002, Virginia said federal deemed-purchase treatment affected federal income-tax computation but did not invalidate a partnership or credit allocation othe…
Did warehouse racks anchored into concrete become real-property improvements, or were they taxable tangible personal property?
They remained tangible personal property. Although concrete anchors physically attached the racks, warehouses could function without them and the racks were trade fixtures expected to change with use …
How did Virginia include an out-of-state corporation's share of joint-venture satellite sales in its 2001 sales factor?
Virginia included the corporation's proportionate share in the sales-factor denominator because a joint venture was treated as a partnership. The satellites were not transferred in Virginia, so those …
Could a landscaper use internal records to exempt installation labor that was not separately stated after Virginia gave inaccurate advice?
For this first audit only, yes. Although installation labor normally had to be separately charged, the auditor verified internal records splitting labor from materials, and the company had relied on i…
Did working overseas for all of 2004 end Virginia domicile when the taxpayer kept an unleased Virginia home and driver's license?
No. Living and working overseas for the entire year did not by itself change domicile. The taxpayer kept an unleased Virginia home and driver's license, later registered another Virginia vehicle, and …
Did a securities-investment partnership managed from Virginia have to file a Virginia return or make its nonresident partners taxable?
No, on the stated facts. The securities-only partnership had no employees, real property, or tangible property and was not carrying on a Virginia trade or business, so it had no Virginia-source income…
Could an advertising company replace Virginia Forms ST-10 and ST-10A with its multijurisdictional blanket exemption certificate?
No. The proposed multijurisdictional form lacked the information Virginia required for a blanket resale certificate. The company had to use Form ST-10 for property bought for resale and Form ST-10A fo…
Could a corporation separately allocate pass-through income from Virginia land sales when its other-state losses eliminated taxable income?
No. The corporation did not follow the required refund procedure or show an unconstitutional or Virginia-caused double-tax result. Its proposal was disfavored separate accounting and would create Virg…
Were software license fees under the same contract decided in Intersections exempt from Virginia sales and use tax for 2002-2004?
Yes. A Fairfax County Circuit Court had already held the license fees under the contract exempt for an earlier period. Because the 2002-2004 appeal presented the identical issue, Virginia treated the …
Could Virginia separately assess a retailer's freight-in costs after those costs were included in the customer price already subjected to sales tax?
No. Freight-in is normally part of a retailer's taxable product cost, but this retailer included the freight in its marked-up customer price and collected sales tax on that full price. A separate audi…
Was a parent company liable for Virginia sales tax on hotel property sold by a wholly owned QSub subsidiary?
No. The purchase and settlement documents showed that the subsidiary, not the parent, owned and sold the hotel. A qualified Subchapter S subsidiary remained a separate legal entity for Virginia sales …
Were replacement parts and tires for trucks carrying exempt oil-and-gas drilling equipment also exempt from Virginia sales tax?
Only partly. Parts and supplies for truck-mounted equipment used directly in exempt drilling qualified under the former exemption. The trucks themselves were not used directly in drilling, so their ti…
Browse Virginia rulings by topic
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.