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.
No Virginia rulings match these filters
Try a different search term or clear the filters.
Does Virginia's pollution control equipment sales tax exemption still apply if the certified equipment is rented, or doesn't stay permanently with the project?
Yes -- the Department confirmed that once DEQ certifies specific property as pollution control equipment, restrictions in the Department's own 'Notice of Sales Tax Exemption' cover letter -- like lang…
Does a home décor store that sells a small selection of packaged snacks have to collect Virginia's disposable plastic bag tax?
No -- Virginia's five-cent disposable plastic bag tax applies only to retailers that qualify as grocery stores, convenience stores, or drugstores under definitions borrowed from the state's alcoholic …
Can I get a Virginia responsible-officer assessment reconsidered by changing my story about how much of the company I owned, or by asking the Department to waive interest that built up during my appeal?
No to both -- reconsideration requires showing one of four specific grounds (misstated facts, changed law, misapplied policy, or new evidence), and a taxpayer who tries to walk back a fact she herself…
If my store doesn't keep detailed sales records, can I dispute the Department's estimate of my taxable sales just by asserting my own different percentage?
No -- once a dealer fails to keep the sales and inventory records required by law, the Department is authorized to issue an estimated assessment based on the best information available, and that estim…
Is prescription pet food exempt from Virginia sales tax, and does a veterinarian have to pay sales tax when buying it to dispense to patients?
Yes -- prescription pet food, food sold directly by a veterinarian or purchased from a third party with a veterinarian's prescription to treat a diagnosed condition, is treated as an exempt prescripti…
How does Virginia calculate, collect, and distribute the sales and use tax revenue entitlement for a qualifying sports or entertainment project like the one in Virginia Beach?
Virginia confirmed that the Virginia Beach sports and entertainment district project qualifies for a sales and use tax revenue entitlement under Va. Code § 15.2-5933, and explained how it works: after…
As of October 1, 2022, who collects and remits Virginia sales tax and transient occupancy tax when a hotel or short-term rental is booked through Airbnb, Expedia, or a similar booking platform?
Starting October 1, 2022, the booking platform or other "accommodations intermediary" (not the hotel or property owner) is legally the one required to collect and remit Virginia sales tax and local tr…
My lab uses chemical reagents that qualify as drugs to run diagnostic blood and urine tests -- can I buy them exempt from sales tax the way a hospital or clinic can buy its medicines?
No -- even if a reagent otherwise meets the legal definition of a "drug," Virginia's medicines-and-drugs sales tax exemption only reaches purchases by a licensed hospital, nursing home, clinic, or a c…
I run a saw-blade sharpening business and add small amounts of metal alloy and plastic to the blades -- do I owe use tax on those materials, or can my customers be charged sales tax on them instead?
The sharpening business itself owed the use tax -- it couldn't shift that cost by taxing its customers instead. A company that sharpened industrial saw blades sometimes added a small amount of metal a…
I'm a cigarette retailer who got assessed after an audit -- I say manufacturer incentive payments should reduce what I owe, but I can't produce complete records of them. Do I still owe the full assessment?
Yes -- without the complete records, the assessment stands. A cigarette retailer never filed sales and use tax returns for a nearly three-year period; under Virginia's cigarette compliance program (wh…
I install wireless signal-boosting systems in buildings -- how does Virginia sales/use tax apply to my sales when a customer gives me an exemption certificate, to my own purchases, to the amplifier equipment I install, and to my shipping charges?
A company that designs and installs in-building wireless signal-boosting systems asked the Department to clarify four separate tax questions, and got four separate answers. First, if a customer provid…
My dental practice buys prosthetic devices and implants in bulk without a specific patient's name on each purchase (to protect patient privacy) -- do these still qualify for Virginia's durable medical equipment sales tax exemption?
No -- bulk purchases not tied to a specific patient at the time of purchase don't qualify, even if a patient's name isn't required to make that connection. A dental implant practice was assessed consu…
I'm a cigarette retailer who got assessed after an audit -- I argued manufacturer incentive payments should reduce it, but my vendors told me they can't produce the underlying records at all. Do I still owe the full assessment?
Yes -- when the documentation genuinely can't be produced, the assessment stands. A cigarette retailer never filed sales and use tax returns for a nearly three-year period; under Virginia's cigarette …
My commercial lease bundles rent for the building together with rent for furniture, fixtures, and equipment -- can the Department override the allocation stated in my lease agreement and tax a bigger share of my rent?
No -- if your lease agreement documents a specific allocation between nontaxable real property rent and taxable tangible personal property rent, the Department will apply THAT allocation, not an audit…
I submitted an intent to appeal along with an offer in compromise, but the Department said my appeal was incomplete and closed my case -- can I still file a complete appeal after my offer in compromise is later rejected?
No -- Virginia's 90-day appeal deadline runs from the date of assessment, and pursuing an offer in compromise instead of, or alongside, a complete appeal does not extend or restart that clock. A taxpa…
My surgery center buys durable medical equipment and prosthetic devices in bulk from a vendor and only pays for items once they're withdrawn for a specific patient's procedure -- does that consignment arrangement qualify for Virginia's medical equipment sales tax exemption?
Not unless you can prove it was a genuine consignment where no money changed hands until a doctor's prescription or work order pulled a specific item for a specific patient. An ambulatory surgery cent…
An auditor disallowed my resale exemption certificates because they weren't on file at the time of the sale, or were undated or backdated -- can I still use them to remove sales from my assessment, and can I get the penalty waived?
No -- once an auditor is already looking at your sales, resale exemption certificates get much stricter scrutiny, and certificates that are undated, dated after the sale, or tied to a customer who was…
My nonprofit club sold golf tournament tickets that bundled the greens fee together with food, and separately paid out cash prizes to winners -- how does Virginia sales tax apply to each?
If you sell one ticket price that bundles a nontaxable admission fee together with a taxable meal or refreshments, and you don't separately state the two charges, Virginia taxes the ENTIRE ticket pric…
My business provides furnished temporary office space, shared workspace, meeting rooms, a business mailing address, and live phone answering on a flexible (hourly to annual) basis -- is any of this subject to Virginia sales tax?
No -- none of these services (furnished temporary office space, shared workspace, meeting rooms, business mailbox, and live phone answering) are subject to Virginia sales tax on what you charge custom…
A restaurant audit estimated my unreported cash sales using my credit card sales data because I didn't keep adequate records, and it also taxed sales I say were exempt -- can I fight both parts of the assessment without producing my own records?
No -- without your own adequate sales records, an estimate built from your available credit card sales data is a valid, previously-approved audit method, and exemption certificates you never had on fi…
My business couldn't produce complete records for some sales and purchases during an audit, so the auditor assessed tax based on estimates and other transactions with the same vendor -- can I still get the assessment reduced by pointing to invoices showing tax was paid on similar purchases?
No -- Virginia's sales and use tax is a transactional tax, so you need documentation for EACH specific transaction, not just a general pattern of paying tax to the same vendor on other purchases. A co…
My practice bought several software programs, and the vendor's invoices didn't say how most of them were delivered -- I say it was all electronic download, but the auditor taxed everything without a stated delivery method. Can I still win this on appeal with vendor documentation I gather afterward?
Yes -- if you can get the vendor to confirm, in writing and tied to your specific invoice, that a program was delivered purely by electronic download with no physical medium, that documentation can wi…
As a contractor installing canopies in Virginia, I separately listed an 'estimated use tax' on some customer invoices at their request, but I also remitted the actual use tax I owed to the Department -- do I owe the Department both amounts, or can I get credit for what I already remitted?
You owe the Department the full amount you charged customers as "tax" (since any tax you collect is held in trust for the state and must be remitted regardless of whether the charge was proper), but y…
My online store uses banner ads that Virginia residents might see, and my parent company may have Virginia nexus through its own wholesale business -- does either of those things give MY company Virginia sales tax nexus?
Banner advertising alone does NOT create Virginia sales tax nexus, but whether a parent company's own Virginia presence could create nexus for a subsidiary depends on facts the Department needs and di…
My business warehouses and repackages inventory owned by retailers to fulfill their customers' orders -- can I buy boxes, tape, and labels tax-free since the retailers ultimately pay for and resell the packaged goods?
No -- the packaging materials exemption only applies to the actual seller of the goods being packaged, and a third-party fulfillment business that merely stores and repackages OTHER companies' invento…
My utility bought a transformer, and the invoice has separate charges for installation/reassembly, shipping, and offloading at the job site -- which of these charges are subject to Virginia sales tax?
Installation and reassembly charges are taxable, separately stated delivery/transportation charges are exempt, but offloading (unloading) charges are taxable as "handling," not exempt transportation. …
My landscaping business was audited for six years instead of the usual three because I'd never registered for use tax, and the auditor won't remove items I say I already paid tax on, or leased equipment, or downloaded software -- can I fight any of this without documentation?
No -- without documentation, none of these claims (tax already paid, exempt equipment leases, exempt electronically-delivered software) can remove items from your audit, and if you were never register…
My business didn't keep adequate sales records, so the auditor reconstructed our sales from bank deposits and then added a 25% markup on top for undocumented cash sales -- can they do that, and do I still owe the first-time penalty?
Split result: reconstructing sales from bank statements was proper, but the extra 25% markup on top of that and the standard penalty were both removed. A drone, RC vehicle, and toy retailer couldn't p…
We built a clean room inside our leased research facility using pre-fabricated walls -- does that count as tax-exempt research and development equipment, or did it become part of the building (and taxable real property) once installed?
It stayed exempt research-and-development equipment rather than becoming taxable real property -- but only because the taxpayer could show its lease required removing everything at the end of the term…
My airline buys food and beverages from a caterer to serve passengers for free during flights -- does our common-carrier sales tax exemption cover those purchases?
No. Virginia's sales tax exemption for airlines operating as common carriers only covers property used directly in actually transporting passengers -- it doesn't extend to food, snacks, and beverages …
My business's sales tax audit found a compliance ratio just under Virginia's 85% threshold, and we've generally filed and paid on time for years -- can we get the compliance and amnesty penalties waived?
No -- Virginia's compliance penalty is mandatory once your audit compliance ratio falls short of the regulatory threshold, and being a generally diligent filer in other years isn't the kind of 'provid…
I missed Virginia's 90-day appeal deadline for a sales tax audit because the audit notice was mailed to an old business address -- can I still get the assessment corrected?
Not through a normal appeal -- Virginia's 90-day appeal deadline runs from when an assessment is mailed to the address the Department has on file, even if that address is no longer current, because it…
The Department is trying to collect my former employer's unpaid sales and withholding taxes from me personally because I was a shift manager there -- can they do that if I never had access to the bank account or authority over which bills got paid?
No -- this taxpayer won. Virginia can only convert a corporation's unpaid tax debt to an individual 'responsible officer' if all four parts of a strict statutory test are met: the person willfully fai…
I was converted a responsible officer for my restaurant company's unpaid sales tax, and I have records that would lower the assessment -- but I haven't been able to get them together yet. Can I still get the assessment corrected?
No -- promising to gather supporting documentation isn't the same as actually providing it, and this taxpayer's assessment was upheld because he never followed through. He was the president and minori…
When a customer's leased equipment is totaled and they pay us a settlement under the lease's total-loss clause, does Virginia sales tax apply to that payment?
Yes, generally -- a payment a lessee makes under an equipment lease's total-loss clause is taxable in its entirety as part of the lease's gross proceeds, with no deduction allowed for the property's c…
An auditor is disallowing exemption certificates from several of my automotive customers because some are undated, some are dated well after the sale, and one is from a volunteer fire department -- which of these actually hold up?
It's a mixed result that turns on the specific certificate and customer, not a blanket rule. Undated exemption certificates and ones dated well after the sale don't get automatic good-faith protection…
The auditor estimated my underreported sales by comparing my federal and state tax returns, and I submitted my bank deposit records to challenge it -- why wasn't that enough to fix the assessment?
Because the bank records this retailer submitted only covered credit card deposits and left out cash sales entirely, they couldn't reliably show the true total of sales -- so they didn't meet the burd…
As a federally recognized Indian tribe, are we exempt from Virginia retail sales tax on purchases we make off our reservation for goods we bring back to use on the reservation?
No -- federal recognition and tribal sovereignty protect a tribe's activities within its own reservation boundaries, but once a tribe or its members go beyond the reservation to make a purchase, they'…
My sales tax appeal was postmarked just 9 days after the 90-day deadline -- can the Department still consider it?
No -- Virginia strictly enforces its 90-day appeal deadline with no exception for a short delay, and this appeal was barred even though it missed the deadline by only 9 days. The taxpayer's sales and …
I'm an artist who painted a custom mural on canvas panels that were installed into a train station -- is my entire charge for the artwork and installation subject to Virginia sales tax?
Yes -- because the customer's whole purpose was to end up with the physical painted canvasses installed in the building, not just to purchase the artist's creative services in the abstract, the entire…
Should a ready-mix concrete company's sales tax be sourced to the local jurisdiction where its plant/office takes the customer's order, or to the jobsite where the concrete is actually delivered and poured?
To where the order is taken, not to the jobsite. A ready-mix concrete producer sued the Virginia Department of Taxation, arguing its concrete sales should be sourced (for local sales tax purposes) to …
Does software delivered purely electronically need a special invoice or contract certifying that delivery method to be sales-tax exempt, and is Virginia's Internet-service-provider equipment exemption limited to companies that sell service at retail rather than wholesale?
No to both restrictions the Department had imposed. In a lawsuit over sales tax refund claims for software, equipment, and services sold to a wireless carrier, the Circuit Court of the City of Richmon…
My restaurant's sales tax audit doesn't match our internal records, and I couldn't get the auditor all the documentation they wanted -- can the assessment still stand?
Yes -- when a taxpayer doesn't provide the records needed to verify its reported sales, the Department may finalize the audit using the best information reasonably available, and that assessment carri…
The Department built my sales tax audit from third-party alcohol board records because I wouldn't turn over my own -- can I still challenge the estimate, and are the fraud and amnesty penalties fair?
Not easily -- once you refuse to provide your own sales records, the Department can lawfully reconstruct your liability from third-party data (like state alcohol board records), and merely asserting t…
I asked the Department to reconsider its ruling on my sales tax audit and submitted more documents -- do I automatically get a second look just because I disagree with the result?
No -- a request for reconsideration must actually meet one of four specific legal grounds (misstated facts, a change in law, misapplied policy, or genuinely new evidence unavailable during the origina…
I was president and a minority shareholder of a restaurant company that fell behind on sales tax -- can the Department make me personally liable for the company's unpaid tax as a 'responsible officer' even though I didn't handle the company's finances or tax filings?
No -- Virginia's responsible-officer penalty under Va. Code § 58.1-1813 requires the individual to have had the specific corporate duty to pay or report the tax, actual knowledge of the failure, AND t…
We're an electrical contractor who was assessed sales tax on the fire alarm and suppression systems we install -- but we think those systems become part of the building, not taxable personal property -- who's right?
The contractor was right -- fire alarm and suppression systems that are hard-wired into a building's electrical network, required for a certificate of occupancy, and intended to remain permanently ins…
The Department already ruled our easy-return-label and logo-setup fees are taxable -- can we get that determination reconsidered by arguing the returned goods leave Virginia, and that a logo setup is really an 'alteration'?
No -- the Tax Commissioner denied reconsideration and reaffirmed both prior conclusions: easy-return-label charges are taxable because they're tied to the ORIGINAL Virginia sale, not the eventual out-…
The Department used a single representative month to calculate our use tax assessment, and the audit took a long time to close -- can we get the sample thrown out and the interest waived?
No -- a taxpayer who didn't object to the audit's sample period when it was first proposed, and who provides no documentation showing the sample was unrepresentative or the resulting assessment wrong,…
We harvest timber and later use lime and tractors to reseed the land afterward -- does Virginia's tax exemption for forest-product harvesting equipment cover that reseeding work too?
No -- Virginia's sales and use tax exemption for forest-products harvesting only covers equipment and supplies used DIRECTLY in removing timber from the harvest site (and related pre-transport steps),…
Our audit assessed us for materials markup we billed customers, disputed our resale-exemption purchases, and applied compliance and amnesty penalties -- what can we still get corrected?
Partially -- a contractor who proves specific items were genuinely purchased for resale (not its own use) can get those line items corrected, but tax actually collected from customers must be remitted…
We bought a veterinary practice and didn't know we had to charge sales tax on retail items like flea powder and pet food -- can we just remit the difference between what we paid vendors and what we charged customers, instead of the full amount?
No -- a veterinarian selling non-treatment retail items (like flea powder, pet food, or medicine sold apart from professional services) must collect and remit sales tax on the FULL marked-up retail pr…
We're out-of-state headquartered with one Virginia location, and we say we were never contacted about an audit before getting an assessment -- does the Department have to actually redo the audit if we dispute getting notice?
No -- when the Department has extensive documented correspondence (emails and mailed letters over more than a year) with an employee at the taxpayer's own headquarters showing the audit was properly i…
What does Virginia Ruling of the Tax Commissioner P.D. 20-172 conclude about Audit: Identity Theft, Fraud, Records?
The Tax Commissioner upheld the full sales tax assessment against a cigarette retailer, ruling that the taxpayer's bare claim that its distributor accounts were used fraudulently, without supporting d…
When can a Virginia dealer treat sales to volunteer fire companies, nonprofits, and government agencies as exempt from sales tax -- and what exemption certificate does it need?
A Virginia dealer must charge sales tax unless it has a valid exemption certificate on file when the sale happens; a certificate obtained afterward is accepted only under greater scrutiny and only if …
Which of a Virginia hospital's purchases of nonprescription drugs, medical devices, and durable medical equipment are exempt from sales and use tax?
It depends item by item. A nonprescription drug or proprietary medicine is exempt (with no exemption certificate needed) only if it actually contains a medicine and is for internal or topical use to c…
If a cigarette retailer can't document what happened to cigarettes it bought tax-free for resale, can Virginia tax it on all of them?
Largely yes. A cigarette retailer bought cigarettes tax-free for resale, and a Department compliance program matched wholesale-distributor records to assess sales tax on cigarettes it couldn't show it…
Do I owe Virginia use tax on off-road (dyed) diesel fuel if the sales tax was already built into the price at the pump?
Off-road (dyed) diesel fuel is exempt from Virginia's separate fuels tax but is still subject to the retail sales and use tax. A dealer may fold that sales tax into the per-gallon pump price, as long …
Are software project-management fees taxable, and does giving away product samples from a tax-free inventory trigger use tax?
Mostly taxable. A high-tech cleaning company was assessed use tax on software contracts and on product samples it pulled from its resale inventory and gave to customers free for 'cleaning trials.' The…
Is a bundled 'unlimited bowling' package taxable just because it includes the option of bowling shoes?
No. A bowling alley's 'Cosmic Bowling' package -- unlimited bowling for a set time, with bowling shoes offered as an option -- is a nontaxable service, not a taxable sale of shoes. Virginia uses the '…
Browse Virginia rulings by topic
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.