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 living and working in another state from a recreational vehicle establish a new domicile when Virginia ties remained?
No. Even if the husband acquired ties to the other state through work and living there in an RV, he did not prove abandonment of Virginia. The Virginia home, vehicle and RV registrations, driver's lic…
When did a taxpayer end Virginia domicile after a temporary move to one state before permanently settling in another?
Virginia domicile continued until June 2014. The taxpayer's temporary move to an intermediate state did not establish a new domicile, and the actions showing residence in the destination state occurre…
Could Virginia assess additional 2014 tax from a final IRS income adjustment when the taxpayers filed no amended Virginia return?
Yes. Virginia began with federal adjusted gross income, required taxpayers to report the final federal change, and could assess at any time when they failed to amend. The Department relied on IRS data…
Did working and leasing homes in another state end Virginia domicile when the taxpayer kept a Virginia home, spouse, vehicles, and license?
No. The taxpayer established work and residences in the other state, but did not prove abandonment of Virginia. His spouse and home remained in Virginia, along with vehicle registrations, a driver's l…
Could taxpayers overturn a 2015 Virginia assessment by saying they filed and paid when the records they cited related to 2014?
Not on the evidence provided. The May 2015 filing and payment would have related to 2014, and Virginia had no record of a 2015 return or tax payment. The best-information assessment stood, but the tax…
Did an appraisal prove that an underperforming automated racking system deserved an economic-obsolescence reduction?
No. The system's efficiency problems were internal, not external economic-obsolescence factors, and the appraisal measured usefulness to this taxpayer rather than market value to a willing buyer. The …
Could a store overturn cigarette assessments by saying it reported all sales when its records did not reconcile to distributor purchases?
No. Distributor records showed tax-free cigarette purchases exceeding reported gross sales, and the store lacked records proving collection, exemption, or error. Virginia credited tax already reported…
Were cigarette sales and tobacco-products assessments valid when distributor invoices contradicted a retailer's records?
Yes. Distributor invoices and the retailer's signed resale certificate supported the cigarette purchases, while the retailer lacked proof of fraud or out-of-state sales. Untaxed tobacco products on ha…
Could a federally disregarded LLC belong to a BPOL affiliated group and exclude service fees received through a wholly owned LLC chain?
Yes. Federal disregarded-entity status did not prevent the LLCs from forming a BPOL parent-subsidiary affiliated group. Service fees paid by the downstream corporation were therefore excluded from BPO…
What deduction could a Virginia contributor claim for prepaid tuition or ABLE contributions after reaching age 70?
At age 70, the contributor could deduct the remaining prepaid-tuition balance after subtracting prior deductions, rather than staying under the usual $4,000 annual limit. Virginia applied the same app…
Could an S corporation claim Virginia's BPOL out-of-state deduction merely because it filed returns or paid franchise taxes in other states?
Not merely from filing a return. Virginia ruled that Texas's margin tax was not an income or income-like tax and that this S corporation had no qualifying Florida income-tax liability. Seven other jur…
Was a Virginia sales-tax audit assessment untimely, and could a subsidiary be assessed for its parent's sale of restaurant assets?
The audit assessment was timely because Virginia delivered the notice to the Postal Service before the extended deadline. But the restaurant asset-sale portion was abated because the parent—not the 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…
Could Virginia residents claim an income-tax credit for the District of Columbia Unincorporated Business Franchise Tax paid on sole-proprietor income?
No. Virginia classified the District of Columbia Unincorporated Business Franchise Tax as a franchise tax rather than the broad-based individual income tax required for the credit. Denying the credit …
Was a taxpayer who worked 165 days in another state still a Virginia resident when he spent 200 days in Virginia and kept his home, license, vehicles, and voting ties there?
Yes. The taxpayer was both a Virginia domiciliary and an actual resident because he did not abandon Virginia and spent 200 days there. He still could claim Virginia's limited credit for income tax pai…
Where were ready-mix concrete sales sitused when Virginia plants manufactured the concrete and a shared Virginia call center first took customer orders?
Wholesale sales made from the manufacturing plants were exempt from BPOL tax, while any retail receipts generally followed the place of sales solicitation. For sales tax, the Virginia call center was …
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 military assignments outside Virginia change a service member's domicile when he kept Virginia licensing, registration, and voting ties?
No. Military orders and leases in other states did not by themselves change domicile. The service member showed neither a new domicile elsewhere nor abandonment of Virginia, where he kept a driver's l…
Did temporary overseas work establish new domiciles when a married couple kept a Virginia home, licenses, voting ties, and a vehicle registration?
No. The overseas moves appeared temporary, and the couple did not prove abandonment of Virginia. They retained a Virginia home, active driver's licenses, voter registration, and a vehicle registration…
Were tent, table, and chair rentals nontaxable services because the vendor transported, set up, monitored, and removed the equipment?
No. The true object was the use of the tents, tables, and chairs. The vendor's attendants only transported, set up, monitored, and removed the items; they did not continuously operate skilled equipmen…
Can an airline's block of hotel rooms qualify for Virginia's 90-day sales-tax exemption when different employees use different rooms each day?
Yes, for the minimum number of rooms occupied on every day of a continuous 90-day period. The same employee did not have to stay in the same room; if occupancy fell to zero on any day, however, no roo…
Could Virginia accept a Qualified Equity and Subordinated Debt Tax Credit application postmarked after the April 1 deadline?
No. Form EDC and supporting documents had to be submitted by April 1 for the preceding tax year. Because the application was postmarked April 23, 2018, Virginia denied the 2017 credit; the annual $5 m…
Could Virginia accept a Qualified Equity and Subordinated Debt Tax Credit application postmarked after the April 1 deadline?
No. Form EDC and supporting documents had to be submitted by April 1 for the preceding tax year. Because the application was postmarked April 18, 2018, Virginia denied the 2017 credit; the annual $5 m…
Did renting homes and filing resident returns in two other states end Virginia domicile when the taxpayer kept Virginia licenses, vehicles, and voting ties?
No. The taxpayer did not prove abandonment of Virginia because she kept a Virginia driver's license, vehicles, and voter registration and later identified herself as a Virginia resident. She could cla…
Did a later merger or acquisition eliminate Virginia's long-term capital-gain subtraction when the company qualified at the time of investment?
No. The statute tied the subtraction to an investment in a qualified business and did not require the company to remain qualified until the stock was sold. Because the business qualified when the inve…
Did taxpayers qualify for Virginia's 2017 tax amnesty after filing an unpaid 2014 return and paying the later assessment during the amnesty period?
Yes. Although the assessment was issued after the program's ordinary June 15 cutoff, the guidelines had a special rule for unpaid returns filed while the taxpayer was not under audit. Because the taxp…
Did working abroad change Virginia domicile when the taxpayer kept a Virginia home, license, voter registration, vehicles, and later returned?
No. Even if the taxpayer established a home abroad, he did not prove abandonment of Virginia. He kept a Virginia residence, driver's license, voter registration, and vehicle registrations and returned…
Were maintenance agreements sold at a Virginia dealership taxable when the vehicle was immediately removed, titled, and registered in another state?
Yes. The vehicle itself escaped Virginia motor-vehicle tax because it was titled elsewhere, but the optional agreement was a separate Virginia retail sale. Parts-and-labor contracts remained taxable o…
Did Virginia's broadcasting-equipment exemption cover equipment sold to a satellite system that transmitted programming only to paying subscribers?
No. Virginia required dissemination to the general public unless the system was a specifically listed cable technology. The customer's satellite service sent signals only to subscribers and was not wi…
Did Virginia order a city to refund BPOL tax on internet-access receipts under the federal Internet Tax Freedom Act?
No. The Department maintained that the Internet Tax Freedom Act applied to BPOL and that BPOL was a gross-receipts tax, not an exempt net-income tax. But it declined to decide whether the city's tax w…
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…
How should Virginia sales tax apply to food, beverages, and vending-machine sales in unstaffed workplace micro markets?
Micro markets could use the reduced food-tax rate for qualifying food for home consumption, but hot food, hot drinks, and other immediate-consumption items remained taxable at the general rate. Checko…
Did a Virginia shutter manufacturer owe sales or use tax on raw materials used for shutters it installed as part of out-of-state real-property contracts?
Yes. Installing fabricated shutters made the taxpayer a using and consuming real-property contractor, not an exempt industrial manufacturer of products for sale or resale. Because it bought and fabric…
Could Virginia grant a land-preservation credit when the taxpayer filed Form LPC-1 almost a year after the statutory deadline?
No. For the July 6, 2015 donation, the statute required Form LPC-1 by December 31, 2016. The Department received it on December 20, 2017. Missing the deadline or misunderstanding the law did not autho…
Did foreign work and advice from an employer or tax preparer prove that a taxpayer was not a Virginia resident in 2014?
No. Temporary work abroad did not by itself abandon Virginia domicile, and the taxpayer supplied no requested evidence of a permanent new home. Filing Virginia resident returns before, during, and aft…
Could taxpayers reverse Virginia assessments after failing to report an IRS deduction change and failing to document later itemized deductions?
Not on the existing record. The 2010 appeal was already exhausted, and Virginia upheld 2011 because the taxpayers failed to report the final IRS reduction of their deductions. For 2014 through 2016, t…
Could taxpayers overturn Virginia assessments based on IRS and withholding information without objective evidence that the adjustments were wrong?
No. Virginia could use IRS information and other available records to adjust federal adjusted gross income, credits, and withholding. Because the taxpayers supplied no objective evidence showing the c…
Did the Servicemembers Civil Relief Act protect a military couple from Virginia income tax when their conduct showed they had established Virginia domicile?
No. Military orders alone do not change domicile, but the federal protection did not prevent Virginia from considering the couple's voluntary ties. Virginia licenses, vehicle registrations, voting, ho…
Was Virginia required to prove residency and wage sourcing from the employer before assessing a nonfiler who refused to provide requested records?
No. Virginia could use federal information, a Virginia address, and reported wages to investigate and make a best-information assessment when the taxpayer did not respond. The taxpayer carried the bur…
Could Virginia hear a BPOL appeal based on a city employee's letter that did not identify itself as a final local determination?
No. A Department appeal generally requires a signed, dated final local determination from the commissioner, chief assessing officer, or an expressly designated signer, plus the prescribed notice. Beca…
Could Virginia decide BPOL payroll-apportionment disputes when the 2012 appeal was late and the county had not issued a valid final determination for later years?
No. The 2012 administrative correction request was filed after its three-year deadline and used a route reviewable in circuit court, not by the Department. For 2013 through 2016, the county's letter l…
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…
Could Virginia accept a 2017 Qualified Equity and Subordinated Debt Credit application postmarked after the April 1 deadline?
No. Form EDC for a prior-year investment had to be filed by April 1. The application was postmarked April 17, 2018. Because the credit was capped and allocated among timely applicants, Virginia enforc…
Did a taxpayer prove she was a District of Columbia resident rather than a Virginia resident for 2015?
No. The taxpayer supplied no evidence establishing a District of Columbia domicile, while her Virginia resident returns before and after 2015 supported continued Virginia domicile. The assessment rema…
Could a Virginia resident claim all joint mortgage-interest and property-tax deductions when payments came from an account shared with a nonresident spouse?
No. A resident filing separately from a nonresident spouse had to account separately for deductions or allocate untraceable items by each spouse's income. Because the payments came from commingled fun…
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…
Did delayed voter registration and licensing prevent a taxpayer from proving that he changed domicile from Virginia before 2009?
No. The taxpayer bought and occupied a home in the other state in 2008, later registered to vote and obtained its driver's license, and explained that his Virginia address was leased property and his …
Did an equity investment need to satisfy every qualified-investment rule for Virginia's qualified-business capital-gain subtraction?
No. The capital-gain subtraction did not import every “qualified investment” condition from the separate credit statute. Equity or subordinated debt was sufficient for the investment form. Because the…
Was a foreign-created trust a Virginia resident trust because its sole trustee was in Virginia, and how was its investment income treated?
Yes. A trust administered by a Virginia fiduciary was a resident trust. Income included in federal taxable income generally entered Virginia taxable income unless modified; federally excluded income g…
Did bank statements prove a Virginia resident separately paid the mortgage deductions claimed apart from a nonresident spouse?
No. The statements showed balances, deposits, transfers, and payments but did not identify the source of deposited funds or prove that separately owned funds paid the mortgage. An account in one spous…
Was Virginia's fiduciary tax assessment against a bankruptcy estate valid when it missed the federal prompt-determination deadlines and denied a debtor credit?
No. Virginia did not notify the trustee of examination within 60 days or finish within 180 days after the proper prompt-determination request. The assessment was untimely. The estate also inherited th…
Could a corporation carry forward a federal 2011 net operating loss when Virginia fixed-date conformity adjustments eliminated the Virginia loss?
No. Virginia taxable income required federal taxable income plus fixed-date additions minus fixed-date subtractions. Because the 2011 additions exceeded the federal loss and subtractions, the corporat…
Could a corporation use foreign-source-income subtractions to increase Virginia NOL carryovers?
No. Virginia would not let foreign-source-income subtractions create or enlarge a Virginia NOL after federal taxable income reached zero. But the audit had to correct its IRC § 965 calculation, and af…
Could taxpayers recover old payments caused by a preparer's failure to claim withholding credits?
No. Virginia refunded only payments still within the statutory period and said it had no discretion to refund older payments. The appeal was also incomplete, and reliance on a preparer did not relieve…
Were a vascular practice's bulk purchases of stents exempt as patient-specific prosthetic devices or hemodialysis supplies?
No. A stent could qualify as a prosthetic implant when bought for a specific patient and could qualify when purchased for hemodialysis. But the practice bought undifferentiated bulk inventory and coul…
Were a sod farm's sales to its affiliate exempt as resale transactions?
Only in part. Sod actually resold by the affiliate qualified for resale treatment after the farm supplied a facially valid resale certificate. Sod the affiliate used in real-property installation cont…
Could a taxpayer challenge a 2007 Virginia assessment in 2018 after missing the appeal deadline?
No. The 2018 appeal of a July 2010 assessment was untimely and incomplete, and the no-return assessment was upheld. Because Virginia collected the assessment on March 8, 2018, the ruling allowed a lim…
Were Virginia's 2011 and 2012 individual income tax assessments issued within the statute of limitations?
The 2011 assessment was too late and was abated because Virginia found no fraudulent intent that would keep the assessment period open. The 2012 assessments were timely because they were issued within…
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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.