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 a couple operate their short-lived 2007 import business for profit despite losses and closing before year-end?
Yes. Virginia found the couple organized and operated a new import business with registrations, online sales accounts, supplier and reseller agreements, relevant experience, and a website. Unexpected …
Could City 1 impose 2009 BTPP tax on a business aircraft that used its hangar more than any other location but stayed there less than six months?
No. Although the aircraft was registered and based at City 1's airport and spent more time there than anywhere else, it was hangared there for less than six months in 2009. Virginia found it was not n…
Could a taxpayer reverse a paid Virginia assessment without providing records substantiating the itemized deductions claimed?
Not yet. Virginia upheld the assessment because the taxpayer supplied no records supporting the itemized deductions despite repeated requests, and the assessment was presumed correct. The Department a…
Could estate beneficiaries subtract lump-sum survivor annuity death benefits from Virginia taxable income?
Yes. The payments qualified because each came from an annuity contract between the deceased annuitant and an insurance company, was paid to a beneficiary in a lump sum, and was subject to federal inco…
Could a Virginia resident filing separately claim dependent exemptions allocated by agreement with a nonresident servicemember spouse?
Yes. Although the couple filed a joint federal return, Virginia law allowed them to allocate federal dependent exemptions between their separate Virginia returns as they mutually agreed. Because they …
Was injectable tuberculin antigen exempt from Virginia sales and use tax when a licensed medical practice bought it for professional use?
Yes. The Department treated the injectable tuberculin antigen as a prescription drug and Schedule VI controlled substance, distinct from the taxable TB tine testing device addressed in an earlier ruli…
Could a couple deduct losses from a horse farm that trained and sold horses for fox hunting despite losses and no separate bank account?
Yes. Virginia found the farm was conducted for profit based on the wife's horse expertise, the couple's 139 to 152 monthly work hours, advertising and sales efforts, adequate books, cost reductions, a…
Could a Virginia resident claim all dependent exemptions when filing separately from a nonresident military spouse?
Yes. A Virginia resident and nonresident military spouse who filed jointly for federal purposes but separately in Virginia could allocate dependent exemptions as they mutually agreed. Proportional all…
How did Virginia sales tax apply to automotive core charges, later core returns, exchanges, and partial refunds?
All core charges were taxable when imposed because they were part of the sales price. Tax was refundable when the part and core charge were fully refunded, proportionally refundable with a partial par…
Did a taxpayer establish foreign domicile by 2006 despite retaining an unrenewed Virginia driver's license and automobile?
Yes. The taxpayer moved abroad in 2002, pursued an advanced degree as part of obtaining permanent status, secured permanent employment, leased a home, bought a local car, sold her Virginia rental prop…
Did a Virginia property owner receive recordation-tax refunds when a deed to a relative was followed by foreclosure the next day?
Only in part. The deed validly conveyed valuable rights when recorded, so the state and local tax based on property value was not refundable merely because foreclosure followed the next day. But Virgi…
Did Virginia's occasional-sale exemption cover equipment transferred to a subsidiary in a corporate spinoff?
Yes. The transfer of all electronic-medical-records assets and equipment to a subsidiary for stock was a reorganization of the business and qualified for Virginia's occasional-sale exemption. The tran…
Was a missionary domiciled in Virginia because she kept a Virginia driver's license, voter registration, bank account, and mailing address?
No. Virginia found that the taxpayer was domiciled in the foreign country during 2006. She had sold her former home and car, moved or stored her property, established a permanent home abroad, and rema…
Did a disabled taxpayer lose Virginia's disability-income subtraction by spending a few hours per week stocking an antique-shop stall?
No. Virginia found that the taxpayer's limited antique-stall activity was not substantial gainful activity. She spent only three to five hours per week obtaining and arranging inventory, worked irregu…
Did a U.S. citizen living abroad become a Virginia domiciliary by using his parents' address and holding a Virginia license, voter registration, property interest, and vehicle?
No. Virginia found that the taxpayer remained domiciled abroad in 2005. He had lived there for decades, maintained a permanent home and license there, worked there full time, and visited Virginia for …
Did an equipment rental company qualify as a short-term rental business when less than 80% of annual rental receipts came from periods of 92 days or less?
No. For 2007 and 2008, the company failed the statutory test because less than 80% of its annual gross rental receipts came from transactions lasting 92 consecutive days or less, including extensions …
Who had to determine fair market value when assessed real-estate value exceeded deed consideration for Virginia grantor tax?
The local circuit-court clerk. After the 2007 amendment, grantor tax used the greater of consideration or property value. Assessed value carried a strong presumption but was not conclusive; clear and …
Could a federal contractor buy hardware under a mixed task order for resale and transfer it tax-free to the federal government?
Yes, on the facts presented. Although CLIN 14 listed hardware as other direct costs and required no separate true-object analysis, Virginia examined the mixed task order as a whole. Its primary object…
Did a mortgage refinancing qualify for Virginia's same-lender recordation-tax exemption after the original lender merged into the new lender?
Yes. The original mortgage lender had merged into the refinancing lender, so the successor became the same lender for the existing debt. Virginia recordation tax therefore applied only to the portion …
Did a taxpayer abandon Virginia domicile in July 2005 despite retaining a Virginia home and some vehicle registrations?
Yes. The taxpayer moved into a State A residence in July 2005 and declared that date on his Virginia part-year return. Later actions—including surrendering his Virginia driver's license, obtaining a S…
What interest rates did Virginia apply to state tax assessments and refunds in the third quarter of 2009?
Virginia's third-quarter 2009 rate was 6% for state tax underpayments and 6% for overpayments. The bulletin also applied the 6% rate through October 15, 2009 for certain estimated-tax additions of tax…
Could a late 2003 Virginia overpayment claim offset a 2004 assessment after an IRS correction moved retirement income between years?
No. The federal correction became final on October 20, 2006, and Virginia said the amended 2003 return had to be filed by October 22, 2007. The couple waited until April 2008. Even though the same ret…
Could a 2003 overpayment reported on an August 2007 original return be credited against a 2004 Virginia assessment?
No. The three-year period for the 2003 overpayment expired May 1, 2007, and the taxpayer filed the original return on August 29, 2007. Calling the request a credit or carryforward rather than a refund…
Did a couple abandon Virginia domicile after moving, buying a home, and operating a business in another state while retaining Virginia ties?
Yes. The couple established a permanent home and demanding business in another state and proved an intent to remain there indefinitely. Keeping an unsold Virginia house, an old Virginia registration, …
Could Virginia refund a 2003 overpayment when the original return was filed in April 2008 after the refund deadline?
No. Virginia's refund statute required the return or written claim within three years of the timely filing deadline. The April 2008 original return came after the applicable period, even considering t…
Was a brick maker's separately stated minimum-load charge an exempt delivery charge or a taxable service?
It was exempt. A third-party carrier charged for a full truckload even when the shipment used less capacity, and the brick maker used the minimum-load line to recover the difference between actual fre…
Did franchisee royalty payments passed through a restaurant corporation let its related trademark subsidiary qualify for Virginia's unrelated-party add-back exception?
No. Although the corporation passed most franchise royalties to its related intangible holding company, the franchise agreements licensed trademarks from the corporation itself. Because the subsidiary…
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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.