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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Could a restaurant use Virginia's reduced food sales-tax rate and avoid tax and interest because it had not collected the full rate?
No. The restaurant was excluded from the reduced food rate because more than 80% of its food receipts came from food for immediate consumption. It owed the uncollected tax itself, and Virginia said th…
Could a Virginia business breeding canines for pharmaceutical companies buy feed, medicines, and vaccines under the agricultural exemption?
No. The canine breeder was not raising crops, statutory livestock, or another farming activity listed in Virginia's agricultural exemption. The medicines and vaccines also were sold directly to the br…
What does Virginia Ruling of the Tax Commissioner P.D. 09-23 conclude about Restaurant mandatory gratuity?
A mandatory gratuity or service charge up to 20% of the meal price was excluded from taxable sales price. Only the portion above 20% was taxable. Virginia said its website reflected the 2006 law chang…
What does Virginia Ruling of the Tax Commissioner P.D. 09-7 conclude about A registered dealer that failed to collect the sales tax on taxable transactions?
No. The supplier had an independent duty to collect, report, and remit sales tax on taxable sales to the consuming contractor. The contractor's separate use-tax obligation did not erase the dealer's l…
Were a medical practice's bulk purchases of knee viscosupplementation devices, splints, and other durable medical equipment exempt from Virginia sales tax?
No. Virginia treated the knee viscosupplementation products as medical devices rather than drugs, and none of the bulk purchases qualified as equipment bought on behalf of identified individual patien…
Was a Virginia consumer use-tax appeal timely when the letter was dated one day after the 90-day deadline?
No. The June 18, 2008 assessment had to be appealed by September 16 under the 90-day period quoted in the ruling, but the appeal letter was dated September 17. Virginia treated the protest as time-bar…
What does Virginia Ruling of the Tax Commissioner P.D. 09-4 conclude about Manufacturer of permanent aesthetic injectable implants does not meet exemption qualifications?
No. Although the prescription implant was an FDA Class III medical device administered by physicians, it treated facial wrinkles for cosmetic purposes. It did not replace a missing body part or body f…
What does Virginia Ruling of the Tax Commissioner P.D. 09-3 conclude about Taxpayer prepares direct mail advertising materials?
No, on the stated facts. Customers took title and possession at the producer's out-of-state dock, assumed risk of loss before delivery to the U.S. Postal Service, and exercised no ownership right over…
What does Virginia Ruling of the Tax Commissioner P.D. 09-2 conclude about Lease payments and capital purchases included in the lease payments.?
The real-property portion was not taxable, but the furniture-and-fixtures portion was. The lessor had to support an allocation between tangible personal property and realty; otherwise the full lease p…
Could a municipality use sales-tax revenue from a 10,000-square-foot public-facility expansion to repay newly issued bonds?
No. The proposed 10,000-square-foot addition to a 63,000-square-foot facility was below the statute's 50% expansion threshold. The planned bonds also would be issued after June 30, 2007, outside the l…
Was a museum and trade-show exhibit fabricator a retailer, a real-property contractor, or an industrial manufacturer for Virginia sales tax?
Mostly a retailer, but with project-level exceptions. Exhibits, traveling displays, furniture, graphics, and signs generally remained tangible personal property, so component materials transferred to …
What does Virginia Ruling of the Tax Commissioner P.D. 09-15 conclude about Tax applies to the charges for the fabrication of tangible personal property?
Yes. Cutting contractor-owned bricks into different shapes so they fit masonry arches changed their form and was taxable fabrication. The contractors were users and consumers of the bricks and purchas…
Were an RFID system vendor's bundled design, testing, training, and implementation charges taxable with the hardware under Virginia's true-object test?
Yes. Virginia found that the contracts' true object was the tangible RFID system, so the design, development, testing, training, and other implementation services were taxable as components of the sys…
Were Internet-downloaded music and a shower chair sold to an individual exempt from Virginia sales tax?
Yes. Documented music downloads were nontaxable Internet-delivered service transactions, and the shower chair qualified as durable medical equipment because shower seating was listed in the regulation…
How did Virginia resolve a government contractor's challenges to audit sampling, purchase exceptions, purchasing-agent status, penalty, and interest?
Virginia partly granted the appeal. It allowed the audit sample to be revised if the contractor supplied records for the commercial-contract portion, corrected several invoice and sample errors, and w…
Must a lessor charge Virginia sales tax on a separately stated reimbursement of local personal property tax collected from a lessee?
No. Virginia's sales-price definition excluded separately stated local property taxes collected by a lessor. When the lessor separately billed the lessee for the allocated personal property tax in add…
Were fluorescent-lamp recycling kits taxable retail products when their price included the container, prepaid shipping, and recycling?
No, the customer-facing charge was exempt. Virginia found that buyers wanted compliant shipping and recycling of mercury-containing lamps, while the box or bucket was only the means of providing that …
Were structural steel and an HVAC system exempt when a Virginia church bought them but hired a contractor to install them in a worship facility?
No. Virginia's church exemption covered building materials only when the church purchased and installed them without contracting for installation. Because the church supplied the structural steel and …
How did Virginia's post-July 1, 2006 government-contractor true-object rule apply to a liquid-nitrogen plant contract, subcontractors, refunds, and modifications?
Virginia applied the true-object test to each order executed on or after July 1, 2006. The supplied statement of work primarily required delivery of a liquid-nitrogen production plant, so the contract…
Did Virginia's temporary multifuel-stove exemption cover outdoor residential furnaces, their operating parts, and refunds of tax already collected?
Only qualifying furnaces were exempt. Virginia's July 1, 2007-July 1, 2012 exemption covered residential heating furnaces capable of burning alternative fuels, but not furnaces limited to wood or foss…
How did Virginia tax Internet-only e-learning, later CD delivery, analysis services, and mixed invoices?
Internet-only courses, mentoring, reference libraries, and downloads were not taxable when no tangible media was provided. If a course was later delivered on CD-ROM, the entire fee became taxable. Ana…
Were carrier maintenance fees and separately stated on-site modular-home trim-out labor exempt from Virginia sales tax?
Virginia split the result. Carrier maintenance fees were taxable because they were only indirectly related to delivery. Separately stated factory trim-out labor performed on-site after contractors joi…
How did Virginia tax broadcast servers, software, support, maintenance, installation, and delivery sold by an out-of-state provider?
Virginia exempted the portion of servers used directly to broadcast signals but taxed their editing and storage use. Tangible or installed conversion software was taxable; separately sold electronic d…
Which purchases by a federal IT contractor were taxable in Virginia's audit, and which qualified for service, government, export, maintenance, or research exemptions?
Virginia granted some audit adjustments for government-system property, professional services, documented out-of-state delivery, qualifying R&D, and certain maintenance contracts, but upheld other ite…
Were unrelated financing loans taxable when an office-equipment lessor documented them in the same master agreement as taxable leases?
No. The separately negotiated financing was a loan unrelated to the equipment lease, so its proceeds were not taxable lease gross proceeds even though both transactions appeared in the same master agr…
Could a seller accept nonprofit or school exemption certificates for bulk prepared food delivered without serving staff to schools and day-care providers?
Yes, when the school or day-care customer qualified for an exemption and gave a valid certificate. Virginia treated the bulk food as tangible personal property because the seller delivered it without …
Who owed Virginia tax on modular homes and related materials bought by a dealer that installed modular buildings as a contractor?
The contractor did. Virginia treated it as the consumer of modular buildings and installation materials, so it had to ensure the proper sales tax was paid or remit use tax itself. The ruling applied t…
Did construction materials stored temporarily in Virginia qualify for exemption when shipped to embassy projects in countries imposing VAT?
Potentially yes. A country imposing VAT rather than retail sales tax satisfied the ruling's sales-tax-free requirement, but the contractor still had to prove that the Virginia-stored materials were in…
Which equipment used by a Virginia cabinet manufacturer qualified for the industrial manufacturing or pollution-control exemptions?
Only the knife grinder qualified on the facts presented. Virginia upheld tax on shipping lifts, administrative bar-code scanners, post-production label printers, and a sawdust diverter that lacked the…
Did Virginia's government exemption remove use tax from materials a contractor installed in government real-property projects?
No. A real-property contractor was the taxable consumer of structural materials used in government projects. It also could not claim a dealer's bad-debt credit, while limited audit items remained open…
Did a timely notice of intent preserve a Virginia sales-tax appeal when the taxpayer did not submit the grounds for relief within 90 days?
No. A notice saying the taxpayer disagreed and was gathering data was not a complete administrative appeal. Because the taxpayer did not fully state its grounds within 90 days of assessment, the right…
When were software service, travel, installation, and modification charges separate from a taxable prewritten-software license?
Independent post-installation work orders for services or travel were removed from the audit, but lump-sum project charges stayed taxable without a valid split between exempt installation or modificat…
Was procurement software custom and electronically delivered when it was licensed for sublicensing to federal customers?
No. The software targeted a broader federal-procurement market and was intended for sublicensing, so it was not designed only for one customer. With no proof of electronic delivery, Virginia treated i…
Did an ISP's servers, software, and distribution equipment qualify for Virginia's Internet-service-provider exemption?
Yes. Subscriber-created news, reviews, articles, and blogs counted as proprietary content, so the bundled email, content, and Internet service qualified. Access-service equipment was exempt; administr…
Did a contract reference to website URLs prove that prewritten software was delivered electronically and exempt from Virginia tax?
No. The URL clause showed that modules would be integrated into a website, but it did not prove the software itself was downloaded. Without stronger delivery records, Virginia upheld the tax on the so…
Did vendor mistakes relieve a Virginia purchaser from use tax on repair parts and goods delivered from out of state?
No. The purchaser was ultimately responsible for Virginia tax when sellers failed to collect it. Repair parts were retail sales, and unidentified or other-state charges on goods delivered in Virginia …
Did a hotel's management arrangement, long-term guests, or Chapter 11 filing invalidate its Virginia sales-tax assessment and officer conversion?
No. The hotel lacked records proving another company operated it or that guests stayed at least 90 continuous days. Its unpaid returns and the partner's knowledge and authority also supported converti…
Were combined shipping-and-handling charges and claimed resale leases exempt in a Virginia audit of an imaging-equipment dealer?
No, not on the records presented. Combined shipping and handling was taxable because transportation was not separately stated, and a resale certificate alone did not prove the fixed-asset leases were …
Were laser access, computer training, and patient-billing charges taxable for two Virginia vision businesses?
The laser agreement was a taxable equipment rental because the physician controlled and operated the laser. Required computer training was part of the taxable equipment sale, while customized patient-…
How should a Virginia HVAC business tax installed equipment, resale inventory, customer tax refunds, and installer transactions?
Installed HVAC made the business the taxable consumer, so it owed tax on purchases and should not charge customers sales tax. Bulk resale inventory could be bought exempt, with use tax due when withdr…
Was medical equipment sold with one segment of a combined practice exempt as an occasional sale or business reorganization?
No. The transaction was a sale of one business segment, not a qualifying stock reorganization, and the medical practice lacked separate books, bank accounts, and pre-sale premises needed to establish …
Could an insurer claim old use-tax overpayments as return credits and exempt agent-incentive brochures and annual reports?
Only with proper proof and reporting. The insurer had to document overpayments, claim them on the correct return line within three years, and support printed-material exemptions. Internal agent brochu…
Could a federal museum contractor buy exhibits and installation materials exempt using the agency's government exemption certificate?
It depended on the contract. Property resold to the agency could be bought for resale, while materials consumed in services or real-property work were taxable. Exemption also applied when the contract…
How did Virginia treat facility-service sales, exemption certificates, missing invoices, and penalties when the taxpayer supplied mixed documentation?
Virginia allowed line-item adjustments supported by valid certificates, permits, invoices, or proof of tax payment, but unsupported exemptions and credits remained taxable. Penalties stayed because fi…
Could a correctional-services vendor use government certificates for food sold to staff and remove unsupported purchases and audit penalties?
Mostly no. Government certificates did not exempt food and coffee consumed by correctional employees. Virginia removed documented tax-paid assets and purchases, but unsupported exemptions and credits …
Which university food-service sales, reimbursements, and purchase claims survived a Virginia audit when documentation was mixed?
Virginia allowed documented line-item adjustments but kept tax on sales lacking valid exemption proof, meals consumed by government employees, reimbursed operating expenses, and numerous unsupported p…
Was Virginia's petroleum storage-tank fee part of taxable off-road-fuel sales price, and how could the seller recover other tax overpayments?
Yes. The storage-tank fee was a separate statutory charge directly connected with the fuel sale, not part of the motor-fuel excise tax, so it entered taxable sales price. Other recovery required vendo…
Which document-management fees, copier purchases, resale items, and printing materials were exempt in Virginia?
Qualifying copy-center management contracts were exempt services, good-faith resale-certificate sales were removed, and high-speed copiers and copy ingredients qualified. Other resale and intracompany…
Were a mechanical contractor's purchases exempt merely because its work was performed at a Virginia semiconductor plant?
Not automatically. Virginia returned the purchases for item-by-item audit review because the contractor had not explained how each item was used directly in manufacturing. Future exempt contractor pur…
How did Virginia's modular-home guidance address dealer registration, tax responsibility, the 60% base, and installed buildings?
Retail modular buildings were taxed on 60% of the final sales price, with registered sellers collecting tax and consumers owing use tax if they did not. A manufacturer or retailer that furnished and i…
Who owed Virginia sales or use tax when modular-home manufacturers, retailers, customers, or contractors handled the sale and installation?
Responsibility depended on who made the retail sale and who permanently installed the home. Under the rules stated in 2008, retail sales used a 60% taxable base, while the installing party was general…
Could a Virginia printer reduce an untaxed-sales audit sample because customers self-assessed tax or later shipped goods outside Virginia?
No. Virginia upheld the sample because customer self-assessment and large-dollar sales did not make it unrepresentative. Delivery to Virginia distribution centers was a taxable first use even when goo…
Was a Virginia countertop fabricator-installer a retailer or a using-and-consuming real-property contractor?
Virginia treated the business as a using-and-consuming real-property contractor, not a retailer. Countertops were not comparable to cabinets under the listed-item rule, and fabrication mainly for inst…
Which machine-shop sales and purchases qualified for Virginia sales-tax exemptions in P.D. 08-97?
Virginia treated the job-shop machine shop as an industrial manufacturer and removed its router and manufacturing supplies from the audit. Sales to government contractors and software lacking proof of…
Could a Virginia taxpayer replace a sample audit with a detailed audit because it expected a lower liability?
No. Virginia upheld the sample-based assessment because the taxpayer did not prove the sampling method invalid; unsupported exempt sales and improperly taxed maintenance contracts remained in the samp…
Were equipment invoices labeled as low-rate-program fees taxable handling charges or excluded interest?
They were excluded interest charges. After reviewing the invoices and finance contracts, Virginia removed the low-rate-program fees from the sales-and-use-tax audit.
How did Virginia tax lump-sum medical-equipment repair bills and combined shipping-and-handling charges?
Lump-sum parts-and-labor repair charges were taxable, but Virginia conditionally removed labor from this first audit after verified corrected invoices separately stated it. Combined shipping and handl…
Were a cancelled log-home sale and a fee for changing the delivery date subject to Virginia sales tax?
The cancelled contract was removed from the assessment, but the delivery-date change fee remained taxable. It paid for administrative rescheduling work, not delivery from seller to buyer, so it was pa…
Could Virginia use a locality's meals-tax audit to assess a restaurant for underreported alcoholic-beverage sales?
Yes. Virginia upheld the assessment because the locality's two-year sample accounted for prices, waste, breakage, spillage, and mixers, and a Department review of the restaurant's records produced con…
Did Virginia sales tax apply to a repair shop's marked-up fee for nontransferable shop supplies?
No. The repairer was the taxable user of shop supplies and paid tax when buying them. Because the supplies were not transferred to customers, the separately listed cost-recovery fee was not a sale, ev…
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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.