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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Does making ice cream from a dairy mix count as 'manufacturing' for local Machinery & Tools tax, and how far back can I appeal a county's business property tax?
Yes -- making ice cream from a dairy mix is 'manufacturing,' so the business's equipment qualifies for the lower Machinery & Tools (M&T) tax classification. An ice cream and frozen-dessert maker claim…
My company is headquartered in a Virginia county but performs its services somewhere else. Can the county charge BPOL license tax on 100% of my gross receipts?
No -- a county cannot pin 100% of your gross receipts to your headquarters when the actual work happens at 'definite places of business' elsewhere. This fuel-services company was headquartered in a Vi…
Which Virginia locality can tax my interstate trucks, at what assessment value, and what if the trucks are registered in another state or weren't garaged anywhere for six months?
Mostly upheld, with one taxpayer win and a remand. An interstate trucking company disputed a county's business personal property tax on its trucks for 2020 through 2024. The Tax Commissioner ruled: (1…
My business was assessed local business personal property tax on equipment I say was never located in that county. How do I appeal, and does the county have to consider my evidence?
The case was sent back (remanded) to the county for another look -- a partial win for the taxpayer. A technology company was assessed local business tangible personal property (BTPP) tax by a county f…
Is post-production storage and loading equipment 'machinery and tools used in manufacturing' subject to Virginia's local M&T tax, or is it exempt because production is already finished?
No — the equipment escaped the local Machinery & Tools (M&T) tax. A limestone quarry that also makes lime products appealed a county's M&T assessment on three 'lime load-out' assets used to store and …
My locality treated a phone call as my BPOL tax appeal — is that a valid local appeal, and can the state Tax Commissioner still hear my case?
A phone call is NOT a valid local appeal, so the Department still had no jurisdiction to decide the case on the merits — but, on reconsideration, it gave the taxpayer a fresh two-month window to file …
Can back-end rebates from a component manufacturer reduce the 'original cost' of my equipment for Virginia's local business tangible personal property (BTPP) tax?
Yes — the rebates reduced the taxable cost basis, and the taxpayer largely won (remanded for verification). A data-center operator bought server racks from 'Rack Sellers' and separately received cash …
Can the Virginia Department of Taxation waive penalty and interest on a local transient occupancy tax assessment?
No. The Virginia Department of Taxation has no jurisdiction to hear appeals of local transient occupancy (short-term rental/lodging) tax at all -- that tax isn't one of the local business or mobile pr…
My city assessed business personal property tax on equipment that's broken or idle and on a consumable supply item -- do I owe tax on all of it?
It depends on the item, and the taxpayer only partly won. The Tax Commissioner sent one disputed item (equipment the taxpayer claimed was returned to the manufacturer) back to the City for another cha…
Are gas boilers that generate steam used as a heat and energy source throughout a chemical plant subject to the local machinery and tools tax?
Likely yes -- if the boilers power the manufacturing, they are taxable machinery and tools, though the local assessor makes the final factual call. A resin and chemical maker asked whether gas boilers…
May a Virginia business appeal a city BPOL assessment directly to the Department before first obtaining the city's final determination?
No. An assessment created an appealable event, but the taxpayer still had to appeal to the city first. The city employee's same-day explanation of the assessments was not a final local determination, …
Does a Virginia locality's farm-equipment BTPP exemption automatically cover aeroponics operations?
Not automatically. Business tangible personal property (BTPP) tax is a local tax, and a Virginia locality may, by ordinance, exempt farm equipment and even define what 'farm' and 'farm equipment' mean…
What Virginia tax interest rates applied during the third quarter of 2019 to assessments, refunds, disputed assessments, estimated tax, and certain local taxes?
For July 1 through September 30, 2019, Virginia's state tax underpayment rate on assessments and overpayment rate on refunds were both 7%, reflecting federal 5% rates plus Virginia's two percentage po…
What Virginia tax interest rates applied during the second quarter of 2019 to assessments, refunds, disputed assessments, estimated tax, and local taxes?
For April 1 through June 30, 2019, Virginia's ordinary state interest rates were 8% on tax underpayments and assessments and 8% on noncorporate overpayments and refunds, reflecting federal 6% rates pl…
What Virginia tax interest rates applied during the first quarter of 2019 to assessments, refunds, disputed assessments, estimated tax, and local taxes?
For January 1 through March 31, 2019, Virginia's ordinary state interest rates were 8% on tax underpayments and assessments and 8% on noncorporate overpayments and refunds -- the federal 6% rates plus…
Can the Department of Taxation hear an appeal of a locality's personal property (car) tax on an individual's personal vehicle?
No -- the Department has no jurisdiction over this appeal. A taxpayer appealed a city's 2018 tangible personal property tax on his personal vehicle, arguing it should be adjusted because he left Virgi…
When can the Department hear a business tangible personal property tax appeal, and what happens if the taxpayer used the wrong local appeal route or appealed before assessments were issued?
The Department had no jurisdiction over either part of the appeal. A freight-transportation taxpayer was assessed business tangible personal property (BTPP) tax by a county for 2015 and anticipated as…
Could a Virginia locality replace a contract-based direct-labor method with payroll apportionment when situsing BPOL gross receipts and calculating an out-of-state deduction?
No. The taxpayer's direct-labor method satisfied Virginia's statutory situs rule and was more accurate than payroll apportionment. The Commissioner remanded the case because the city also had to recal…
Was property at a manufacturer's data center exempt from local business tangible personal property tax when it supported manufacturing and separate government IT services?
Partly. Property supporting the manufacturer's operations was not subject to local business tangible personal property tax, even though no manufacturing occurred at the data center. Property dedicated…
What Virginia tax interest rates applied in the fourth quarter of 2018 to assessments, refunds, disputed assessments, estimated tax, and local taxes?
For October 1 through December 31, 2018, Virginia's ordinary interest rates were 7% on tax underpayments and assessments and 7% on overpayments and refunds. The reduced rate for qualifying disputed as…
Did hospital property have to be absolutely owned by the hospital to qualify for Virginia's business tangible personal property exemption?
No. “Belonging to” a hospital did not require absolute ownership; an interest or estate in the property could be enough. But the taxpayer still had to prove to the city that the physical-therapy equip…
Did equipment at medical practices acquired and operated by a nonprofit hospital qualify for Virginia's hospital property-tax exemption?
Yes. The nonprofit hospital acquired, owned, and managed practices that provided health programs and medical services to the public, satisfying the dominant-purpose test. The hospital classification e…
Was tangible property acquired after 2003 by a nonprofit hospital LLC taxable merely because the city had not adopted a new exemption ordinance?
No. Virginia treated the pre-2003 nonprofit-hospital provision as a classification exemption that continued after the constitutional and statutory changes. Property later acquired by a qualifying nonp…
Which packaging, storage, and warehouse equipment at a Virginia soft-drink plant was directly used in manufacturing and subject to local M&T tax?
Bulk-shipping palletizers, wrappers, and passive storage were not manufacturing machinery. Water-cooling and pressurized-air systems supporting bottle molding were taxable. The taxpayer failed to prov…
What Virginia tax interest rates applied during the third quarter of 2018?
For July 1 through September 30, 2018, Virginia's ordinary interest rates were 7% on tax underpayments and assessments and 7% on overpayments and refunds. The reduced rate for qualifying disputed asse…
Was BPOL a net-income tax excluded from the Internet Tax Freedom Act's internet-access protection?
No. Virginia said BPOL taxes gross receipts without deductions and is not a net-income tax excluded from the federal Act. Even so, the Department declined to decide whether the city's tax was grandfat…
Did Virginia order a county to refund BPOL tax on internet-access receipts under federal preemption?
No. Virginia said federal law may be judged by a tax's operation and effect and had previously applied the Internet Tax Freedom Act to BPOL. But it declined to decide the disputed grandfather-status q…
Did Virginia order a city to refund BPOL tax on internet-access receipts under the Internet Tax Freedom Act?
No. Virginia recognized that the Internet Tax Freedom Act could apply to BPOL tax, but declined to decide the disputed factual question whether the city was grandfathered. Without an order for correct…
Did Virginia order BPOL refunds after rejecting a city's narrow reading of the Internet Tax Freedom Act?
No. Virginia maintained that the Internet Tax Freedom Act was not limited to transactional taxes and could reach BPOL. But it declined to decide the city's disputed grandfather status, so the local re…
Were a grower's plants and nursery equipment exempt from local Merchants' Capital and property taxes?
Only the plants. Plants grown from the taxpayer's own clippings were agricultural products held by their producer and exempt from Merchants' Capital tax. The county could still classify the business a…
What Virginia tax interest rates applied during the second quarter of 2018 to assessments, refunds, disputed assessments, and local taxes?
For April 1 through June 30, 2018, Virginia's ordinary interest rates were 7% on tax underpayments and assessments and 7% on overpayments and refunds. The reduced rate for qualifying disputed assessme…
Could the Virginia Department review a locality's valuation of an individual's personal vehicle for tangible personal property tax?
No. The Department's local-tax appeal jurisdiction covers local business taxes and mobile property taxes, not tangible personal property tax assessed on an individual's personal vehicle. The owners ha…
Could the Department decide whether a personal-vehicle tax should be prorated after the owner moved away?
No. Tax on an ordinary personal vehicle is neither a local business tax nor local mobile property tax within the Department's jurisdiction. Even though the city's final letter gave misleading appeal i…
Did low operating capacity require a county to reduce the taxable value of a new automated racking system?
Not on the evidence submitted. A representative's economic-obsolescence analysis did not invalidate the county's cost-based value, but the county had to consider any bona fide independent appraisal de…
What Virginia tax interest rates applied in the fourth quarter of 2017 to assessments, refunds, disputed assessments, estimated tax, and local taxes?
For October 1 through December 31, 2017, Virginia's ordinary interest rates were 6% on tax underpayments and assessments and 6% on overpayments and refunds. The reduced rate for qualifying disputed as…
What Virginia tax interest rates applied in the third quarter of 2017 to assessments, refunds, disputed assessments, estimated tax, and local taxes?
For July 1 through September 30, 2017, Virginia's ordinary interest rates were 6% on tax underpayments and assessments and 6% on overpayments and refunds. The reduced rate for qualifying disputed asse…
What major Virginia state and local tax changes did the Department of Taxation identify in its 2017 Legislative Summary?
Virginia's 2017 Legislative Summary was a broad historical guide, not a taxpayer ruling. Major changes included a Fiscal Year 2018 tax-amnesty program, new electronic filing and payment mandates, IRC …
Did the federal Internet Tax Freedom Act bar a Virginia city from including an internet provider's access-service receipts in its BPOL gross-receipts base for 2010 and 2011?
Not for the years at issue. Virginia concluded that a BPOL tax measured by internet-access receipts was a tax on internet access under the federal Internet Tax Freedom Act. But the city proved it had …
Must a business claiming Virginia's BPOL out-of-state deduction prove that each deducted gross receipt exactly equals income shown as a separate amount on another state's income tax return?
No. Once the city accepted that the taxpayer was eligible for the BPOL out-of-state deduction, the taxpayer did not have to make its sitused gross receipts equal the taxable income shown on another st…
Were cable converter boxes taxable as business tangible personal property by a Virginia city for 2015?
No. Virginia held the customer converter boxes were intangible property exempt from local business tangible personal property tax under Va. Code § 58.1-1101 A 2a. The Department remanded the case and …
What Virginia tax interest rates applied during the second quarter of 2017?
Virginia's second-quarter 2017 rates were 6% for tax underpayments and 6% for tax overpayments. The reduced rate for qualifying assessments under administrative appeal was 1%. Certain local delinquenc…
Can a Virginia locality tax a nursery's inventory as merchants' capital and its other business property under BTPP rules?
Yes. Merchants' capital and business tangible personal property are separate property classes, so both taxes can apply. A locality may not impose both BPOL and merchants' capital tax on the same merch…
What Virginia tax interest rates applied during the first quarter of 2017?
Virginia's first-quarter 2017 rates were 6% for tax underpayments and 6% for tax overpayments. The reduced rate for qualifying assessments in administrative appeals was 1%. Certain local delinquency a…
What Virginia tax interest rates applied during the fourth quarter of 2016?
Virginia's fourth-quarter 2016 rates were 6% for tax underpayments and 6% for tax overpayments. The reduced rate for qualifying assessments in administrative appeals was 1%. Certain local delinquency …
What did Virginia advise a town about BPOL authority, tax bases, appeals, out-of-state receipts, and receipt situs?
A county generally could not duplicate a town's BPOL tax without town permission. A locality could use gross receipts or Virginia taxable income but had to use one base for all business classes. Appea…
Could a hotel purchaser value acquired business property at its resale proceeds instead of the city's percentage-of-original-cost method?
No. Virginia law directed most business tangible property to be valued using percentages of original cost, meaning the capitalized cost when first purchased new, not a later buyer's allocated purchase…
What Virginia tax interest rates applied during the third quarter of 2016?
Virginia's third-quarter 2016 rates were 6% for tax underpayments and 6% for tax overpayments. The reduced rate for qualifying assessments in administrative appeals was 1%. Certain local delinquency a…
What Virginia state and local tax legislation did the 2016 General Assembly enact?
This Department guide summarizes state and local tax legislation enacted during Virginia's 2016 General Assembly session through the April 20 reconvened session. Each entry identifies the legislation,…
What Virginia tax interest rates applied during the second quarter of 2016?
For April 1 through June 30, 2016, Virginia's ordinary state interest rates were 6% on tax underpayments and assessments and 6% on noncorporate overpayments and refunds. The reduced rate for qualifyin…
Could a business bypass the county BPOL appeal process by asking Virginia for an advisory opinion during an active assessment dispute?
No. Virginia would not use an advisory opinion to decide the substance of an active county BPOL assessment dispute when the county had not joined the request. The taxpayer first had to appeal to the l…
What Virginia tax interest rates applied during the fourth quarter of 2015?
Virginia's fourth-quarter 2015 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments in administrative appeals was 0%. Certain local delinquency …
Was an HVAC distributor a BPOL retail merchant because contractors consumed many purchased parts while performing services, or was it a wholesaler?
Virginia classified the distributor as a wholesale merchant. Its contractor, government, and industrial customers bought goods for business use, the HVAC contractors likely used them in a productive p…
What Virginia state and local tax legislation did the Department summarize from the 2015 General Assembly session?
The Department's informational guide summarized 2015 enacted changes to taxes it administers and local taxes on which it assists, including general administration, income tax, sales and use tax, tobac…
What Virginia tax interest rates applied during the third quarter of 2015?
Virginia's third-quarter 2015 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments in administrative appeals was 0%. Certain local delinquency a…
Could Virginia decide which printing-facility property was taxable before the city corrected its machinery-and-tools tax assessments?
Not yet. Virginia did not decide which property was taxable. It remanded the case because the city had acknowledged that some machinery-and-tools tax treatment was wrong but had not corrected the 2010…
Were cable-television converter boxes taxable as local business tangible personal property in Virginia?
No. Virginia classified the cable-television converters, or set-top boxes, as intangible property exempt from local business tangible personal property tax under Va. Code § 58.1-1101(A)(2)(a). The cas…
Could a service company situs BPOL receipts outside the city based on a contract requiring work at an out-of-state facility?
Possibly. The contract strongly suggested that the services were performed at an out-of-state definite place of business, but the taxpayer still had to document which employees performed the work and …
Could a Virginia county obtain reconsideration of an M&T tax decision when it filed its request after the 45-day deadline?
No. The prior determination was dated January 8, 2015, making the adjusted 45-day deadline February 23 because February 22 was a Sunday. The county did not file until March 10, so Virginia could not r…
What Virginia tax interest rates applied during the second quarter of 2015?
Virginia's second-quarter 2015 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments in administrative appeals was 0%. Certain local delinquency …
Did a taxpayer prove that computer-controlled medication management systems had to be classified as computer equipment for local BTPP tax?
No. The systems combined computers and peripherals with medication drawers and shelving, and the taxpayer did not prove the computer components could be reprogrammed and used separately. The county's …
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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.