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 Virginia sales tax apply to a lump-sum equestrian package that included horseback riding, lodging, meals, and other activities?
No. Virginia found that customers' true object was horseback riding, making the lump-sum package an exempt service. The retreat owed tax on food, restaurant meals, lodging, and other inputs used to pr…
When do CDs, videos, and photography qualify for Virginia's advertising sales-tax exemption?
Virginia denied the exemption. A sales-presentation CD was not disseminated to the public, and the taxpayer did not show that the video or photography was created for a specific advertising campaign.
Were a catalog stand and company-logo planner guides exempt Virginia advertising materials?
No. The bound catalogs could be displayed without the stand, so the stand did not qualify as necessary support for printed materials. The planner guides remained taxable administrative tools because n…
Was a home-infusion pharmacy a retailer of IV drugs and medical supplies when an affiliate separately provided nursing services?
Yes. The pharmacy sold IV medications and medical supplies for home use, while a separate legal entity provided nursing and therapy services. Its purchases of the drugs and supplies were therefore exe…
When were controlled drugs bought in bulk by a Virginia cardiac center exempt from sales tax?
The exemption depended on invoice proof. Purchases naming a licensed physician or the physician's DEA number were removed from the audit; purchases billed only to the cardiac center remained taxable.
Could a taxpayer limit Virginia's audit extrapolation to 2003-2004 because its purchasing practices allegedly changed?
No. Virginia upheld the sample across the full audit period because government-contract purchases were part of normal business activity and the taxpayer did not show that the sampled transactions were…
Did Virginia sales tax apply to a nonprofit's event tickets when the ticket price included a catered meal?
Yes. Although admission alone was exempt, the ticket entitled the buyer to a taxable catered meal, making the full ticket price taxable. Documented tax paid to vendors could receive limited audit cred…
Did a notice of intent preserve a Virginia tax appeal when the taxpayer did not file a complete appeal within 90 days?
No. A notice of intent was not a complete appeal. Because the taxpayer did not file the required grounds and relevant facts within 90 days of assessment, the appeal was time-barred and collection resu…
Could vendor documentation reduce Virginia use tax on invoices that combined shipping and handling into one charge?
Yes, in part. Combined shipping and handling was generally taxable, but written vendor breakdowns or confirmation that a fee was shipping only supported adjustments. Remaining sampled errors were stil…
What Virginia state and local tax legislation did the Department summarize for the 2008 General Assembly session?
This was a broad historical guide, not a taxpayer-specific ruling. It summarized 2008 legislation through March 13, including federal conformity, income-tax credits and administration, sales-tax exemp…
Did manufacturing prototype cellular phones and circuit boards for a customer qualify for Virginia's production exemption?
Yes. New agreement and facility evidence showed that the prototypes were industrially manufactured products made for sale to the customer, not merely preproduction work, so Virginia removed the relate…
Could Virginia extend a contractor's consumer-use-tax audit to six years and tax separately stated mileage and road-service charges on vehicle repairs?
Yes. Because the contractor had not filed consumer use tax returns and could not document tax paid on purchases, Virginia properly used a six-year audit period. Mileage and road-service charges incurr…
Were a Virginia wholesaler's purchases of fuel-grade ethanol exempt from retail sales and use tax when customers would blend it into motor fuel subject to the Fuels Tax?
Yes. Because the wholesaler's customers would pay Virginia Fuels Tax when the ethanol was blended with motor fuel, the ethanol was fuel subject to that tax and qualified for the retail sales-and-use-t…
Did a screen-printing and embroidery retailer qualify for Virginia's industrial manufacturing exemption or avoid tax because the Department audited it years after opening?
No. The business primarily sold custom apparel to end users and was classified as retail, not industrial manufacturing, so its equipment purchases were taxable. Most of the assessment also involved un…
Did a Virginia flower-bulb seller owe use tax when it removed unsalable bulbs from resale inventory and donated them to charities?
Yes. Removing bulbs from tax-free resale inventory and donating them was a taxable use, measured by the bulbs' cost price, unless another exemption applied. The separate exemption for qualifying catal…
Did Virginia's research-and-development exemption cover a missile contractor's JP-10 fuel valve, insulation rings, and rocket-motor casting tooling?
Yes. Each item was integral to experimental missile or rocket-motor work and used exclusively in the specified project: the valve regulated test fuel, the rings held rockets during static firing, and …
Were separately stated fuel surcharges, offloading fees, and demurrage all exempt Virginia transportation charges?
No. Separately stated fuel surcharges supplemented freight and were exempt transportation charges. Offloading was taxable handling after delivery, and demurrage for driver wait time caused by delayed …
Was software used to plan production, and a thermal oxidizer awaiting pollution-control certification, exempt from Virginia sales and use tax?
No. The production-planning software was an administrative tool used indirectly, not software that immediately directed or controlled production. The thermal oxidizer also remained taxable because it …
After Virginia's 2007 policy change, did contractors installing sod, plants, or silt fence collect sales tax from customers or pay tax on their materials?
Qualifying real-property and landscape contractors became users and consumers: they paid sales or use tax on installed sod, plants, silt fence, and similar materials instead of collecting retail tax f…
Were dental implants exempt when a dental practice could not document on invoices that each implant was purchased for a specific patient?
No. The practice could not prove that the audited implants were purchased for specific patients because the invoices lacked patient identification and its internal order forms had been discarded. Virg…
Was a chemical used to clean paper-mill calendar rollers between production runs exempt as a manufacturing supply?
No. Immunol cleaned calendar-stack rollers before or after paper production, not during the production process. Virginia treated that use as taxable general maintenance even though clean rollers prote…
Were two classified federal IT contracts treated as service contracts or sales of tangible property for Virginia use tax?
They were sales of tangible personal property. The government's acquisition and control of computer systems and hardware was the true object, so resale items were removed from the audit. Other purchas…
Was a cabinet fabricator a real-property contractor when customers separately hired and paid an independent installer?
No. Because the fabricator neither installed the cabinets nor had a contractual duty to install them, it sold tangible personal property at retail and owed tax on the full sales price. Virginia allowe…
Were corn, wheat, barley, and rye exempt from Virginia sales tax when individuals bought the grain to burn as home-heating fuel?
No. Virginia's domestic-fuel exemption specifically covered artificial or propane gas, firewood, coal, and home heating oil. Grain did not qualify merely because customers burned it for home heat. A s…
Could Virginia consider a retailer's exemption certificates when its administrative appeal was filed after the 90-day deadline?
No. The retailer filed its appeal after the 90-day statutory deadline, so the Tax Commissioner could not consider whether the customer exemption certificates supported the sales. The assessments were …
Under Virginia's 2007 policy, did a Virginia Internet and phone seller tax third-party gift orders by the buyer's transaction or only by the recipient's destination?
Virginia required the seller to keep collecting Virginia tax under its constructive-possession policy unless it had approval to collect the recipient state's tax or a statutory use exception applied. …
Could a semiconductor manufacturer sell equipment tax-free to unrelated lessors for immediate exempt leaseback using resale certificates?
Yes, conditionally. Each lessor could give the manufacturer Form ST-10 for the resale purchase, even though the later leaseback was exempt rather than taxable. The manufacturer could give each lessor …
Which products qualified under Virginia's 2007 Energy Star Sales Tax Holiday, and can these guidelines be used for current sales?
Historically, eight listed Energy Star product types costing $2,500 or less qualified when bought for noncommercial personal use during the four-day October holiday. The source states that the recurri…
Which separately stated airline catering and aircraft services were taxable when the provider worked with airline-owned food, equipment, and supplies?
Separately stated services performed independently on airline-owned property—including much cleaning, loading, kit assembly, security checks, and paperwork—were not taxable. Services connected to the …
When could a federal contractor buy property tax-free as the government's designated purchasing agent, and did contract pricing method matter?
The exemption applied only when the government officially designated the contractor as purchasing agent and the government's credit was directly bound. The result did not depend on whether the contrac…
Did a Virginia home-based employee soliciting orders create sales tax nexus while the out-of-state manufacturer remained protected from income tax?
Yes for sales tax, but not corporate income tax on the stated facts. Employee solicitation created sales tax nexus and required registration and collection on Virginia sales. Because the employee's wo…
Did Virginia's reduced food tax rate apply to packaged bulk groceries sold to nursing homes, correctional facilities, hotels, and other businesses?
Yes, under the 2007 rules. Packaged staple foods and cold prepared foods in closed containers, not sold hot or for immediate consumption, qualified as food for home consumption regardless of whether t…
Could a using and consuming contractor offset its own use tax with sales tax it wrongly collected from customers and remitted to Virginia?
No. A using and consuming contractor could not use sales tax improperly charged to customers to satisfy its own tax on materials. Refund or credit required proof that the contractor bore the tax or re…
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…
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…
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 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…
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…
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 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 …
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…
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…
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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.